ECO Eco (atlantic) Oil & Gas Ltd

29 July 2024

ECO (ATLANTIC) OIL & GAS LTD.

("Eco," "Eco Atlantic," "Company," or together with its subsidiaries, the "Group")

Transaction with Africa Oil Corp. and Corporate Update

Agreement to sell a 1% interest in Block 3B/4B South Africa in exchange for cancellation of all of Africa Oil's shares and warrants in Eco (worth C$ 11.5m)

Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX ‐ V: EOG), the oil and gas exploration company focused on the offshore Atlantic Margins in South Africa, Namibia, and Guyana, is pleased to announce it has signed an Assignment and Share Cancellation Agreement ("Assignment Agreement") with Azinam Limited ("Azinam"), Eco's wholly owned subsidiary, Africa Oil Corp. ("Africa Oil") and Africa Oil SA Corp ("AOSAC"), pursuant to which Azinam has agreed to sell and assign a 1% Participating Interest in Block 3B/4B offshore the Republic of South Africa, including the associated Exploration Right and Joint Operating Agreement rights ("Assigned Interest") to AOSAC in exchange for the cancellation of all common shares in the Company ("Common Shares") and warrants over Common Shares ("Warrants") held by Africa Oil (the "Exchange Transaction").  No additional rights in the rest of Eco's portfolio assets in Guyana, Namibia and South Africa are part of the Agreement. 

Africa Oil currently holds, in aggregate, 54,941,744 Common Shares and 4,864,865 Warrants (collectively, the "Eco Securities"), which, assuming conversion of the Warrants, would equal 16.16% on a diluted basis (c.15% non-diluted) of the total outstanding common shares of Eco worth approximately C$11m. 

Upon completion of the conditions precedent to the Exchange Transaction, including requisite regulatory approvals from the South African Government, TSX Venture Exchange ("TSXV"), applicable Canadian Securities Commissions, and the relevant approvals from the Block 3B/4B Joint Venture Partners, Azinam will assign the Assigned Interest to AOSAC and in return Africa Oil will transfer the Eco Securities for immediate cancellation ("Completion"). Upon Completion, Eco will hold a fully carried 5.25% interest in Block 3B/4B Offshore South Africa, reducing from the current 6.25%. As a result of the Exchange Transaction, Africa Oil will, following Completion, no longer be a shareholder in the Company and will no longer have the right to appoint a director to Eco's Board of Directors.

As part of the transaction, Africa Oil has entered into a lock-up agreement, according to which it is restricted from trading, transferring, mortgaging or dealing in any of the Eco Securities until Completion.

The Assignment Agreement serves Eco's shareholders as a value creation initiative through a significant 16.16% (on a diluted basis) reduction in the Company's total common shares count.  The Company currently has 370,173,680 Common Shares issued and outstanding. Upon and subject to Completion, Eco's issued and outstanding common share capital will, ceteris paribus, be reduced to 315,231,936 Common Shares. A further update will be provided on Completion to confirm the timing for the cancellation of the Eco Shares. 

Guyana and Namibia

In Guyana, an active farmout process continues for the offshore Orinduik Block. This process is now fully controlled by Eco as Operator, enabling us to present our own technical insights and drive the process forward. Eco was encouraged to note the recent news from neighbouring Stabroek block, where the Operator ExxonMobil is planning for a seventh development at Hammerhead.

In Namibia, a multi-block farmout process is underway for all or part of Eco's four offshore Petroleum Exploration Licences ("PEL"): 97, 98, 99, and 100.  Eco holds Operatorship and an 85% Working Interest in each PEL representing a combined area of 28,593 km² in the Walvis Basin.  In June 2024, Eco added ~1,383km 2D data licensed on PEL100 (Tamar block) to its database, which is being technically evaluated and interpreted by the team to define additional seismic acquisition areas within the Block, along with new leads and prospects.

Gil Holzman, Co-founder and Chief Executive Officer of Eco Atlantic, commented: 

"We are very pleased to announce this transaction with Africa Oil, which follows our proposal to cancel their entire share and warrant position in the company worth C$11M in exchange for a 1% Participating Interest in Block 3B/4B, offshore South Africa. This deal equates to a c.15% reduction in Eco's overall share count, affording our shareholders a less dilutive exposure to our highly strategic exploration portfolio in Namibia, South Africa and Guyana.

"We thank Africa Oil for their support since 2017 as it enabled Eco to enter new and exciting hydrocarbon territories and conduct exploration campaigns. We look forward to continuing our working relationship as JV Partners on Block 3B/4B.   I'm grateful to my team for reaching this excellent deal, which substantially reduces our share count to the benefit of our investors, whilst retaining exposure to all of our existing assets.

"We continue our focus on conducting exploration campaigns in global hydrocarbon hotspots, such as the Orange basin in South Africa, the Walvis basin in Namibia, and in Guyana, the team is extremely busy working with new licensed data in Namibia, defining additional seismic acquisition areas and leads, and on active farmout processes in both Guyana and Namibia.  We look forward to providing further updates to our shareholders over the rest of 2024."

Dr Roger Tucker, President and CEO of Africa Oil, commented:

"This is a mutually beneficial transaction for Africa Oil and Eco Atlantic that meets our respective strategic objectives. We thank Eco Atlantic's management for their collaborative approach in working with us since 2017. We are pleased to continue working with them to close this transaction and to drill the first exploration well on Block 3B/4B, targeting substantial prospectivity in the Orange Basin, offshore South Africa."

Related Party Transaction

Africa Oil is a substantial shareholder in Eco, holding more than 10% of the Company's issued share capital, and accordingly is a related party as defined by the AIM Rules for Companies.  Accordingly, the Exchange Transaction is a related party transaction pursuant to Rule 13 of the AIM Rules for Companies.  The independent Directors for the purposes of the Exchange Transaction, being all of the Directors other than Keith Hill and Oliver Quinn, having consulted with the Company's nominated adviser, Strand Hanson Limited, consider that the terms of the Exchange Transaction are fair and reasonable insofar as Eco's shareholders are concerned.  Additionally, the transaction is a "related party transaction" (as such term is defined in Canadian Securities Administrators Multilateral Instrument 61-101 "Protection of Minority Security Holders in Special Transactions" ("MI 61-101")., The Company is relying on the exemptions from the formal valuation and minority approval requirements provided in Sections 5.5 (a) and 5.7(a) of MI 61-101. 

The Company has applied for certain exemptive relief from the applicable Canadian Securities Commissions and will provide an update via a press release once it receives an exemptive relief order from the Securities Commission.

**ENDS**

For more information, please visit www.ecooilandgas.com or contact the following:

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 (as amended).

About Eco Atlantic:

Eco Atlantic is a TSX-V and AIM-quoted Atlantic Margin-focused oil and gas exploration company with offshore license interests in Guyana, Namibia, and South Africa. Eco aims to deliver material value for its stakeholders through its role in the energy transition to explore for low carbon intensity oil and gas in stable emerging markets close to infrastructure. 

Offshore Guyana, in the proven Guyana-Suriname Basin, the Company operates a 100% Working Interest in the 1,354 km² Orinduik Block. In Namibia, the Company holds Operatorship and an 85% Working Interest in four offshore Petroleum Licences: PELs: 97, 98, 99, and 100, representing a combined area of 28,593 km² in the Walvis Basin.  Offshore South Africa, Eco holds a 20% Working Interest in Block 3B/4B and pending government approval a 75% Operated Interest in Block 1, in the Orange Basin, totalling some 37,510km².