Eco (Atlantic) Oil and Gas Ltd. Announced on Tuesday that it decided against acquiring JHI Associates, a company with 17.5% ownership of Guyana’s Canje Block.
Eco said that while all the main commercial points were agreed upon in keeping with the commercially binding term sheet announced on March 14, 2022 (including the proposed issuance of 127 million new common shares of Eco to JHI shareholders), it was not possible to agree on the terms of lock-up arrangements required by Eco. It said these arrangements had been designed to restrict and control any subsequent immediate sale of the consideration shares to be issued to the shareholders of JHI, to provide Eco Atlantic’s shareholders with the appropriate levels of protection in such a transaction.
It is for this reason that Eco’s board decided against proceeding with the transaction at the current time.
Eco’s founder and chief executive, Gil Holzman, said, “We look forward to remaining a significant shareholder in JHI with over 7% of the company and, as such, retain exposure to the potential of the Canje Block. We wish the JHI management the best of luck in growing and monetizing the business to benefit all shareholders.”
Eco said it may re-evaluate the proposed acquisition later.
The Canje block partially borders the Stabroek Block where over 30 discoveries have been made totaling nearly 11 billion oil-equivalent barrels. Canje also partially borders Block 58 offshore Suriname which is operated by TotalEnergies and holds, according to Morgan Stanley, a potential 6.5 billion oil-equivalent barrels.
The deepwater Canje acreage is operated by ExxonMobil affiliate, Esso Exploration and Production Guyana Limited (EEPGL), which holds 35% interest. Mid-Atlantic Oil & Gas is the other partner on the block with 12.5% interest.
Canje Block is estimated to hold potential resources of about 10 billion oil equivalent barrels. However, a three-well drill campaign at the Bulletwood-1, Jabillo-1 and Sapote-1 wells have so far failed to find commercial hydrocarbons.
While the results demonstrated no commercial potential, EEPGL said it found invaluable data to inform future exploration. The company is awaiting regulatory approvals for a 12-well exploration campaign at this block.