-- Eco (Atlantic) Oil & Gas (EOG.V) on Monday said it has signed an agreement to farm down 60% participating interest in all three of its petroleum exploration licenses offshore Namibia to BP Namibia Energy.
Under the agreement, Eco subsidiaries will farm out an aggregate of 60% participating interest and transfer operatorship to BP of Block 2012A PEL97, Blocks 2111B and 2211A PEL99, and blocks 2211B and 2311A PEL100.
At deal completion, Eco will retain a 25% interest in PEL97, PEL99 and PEL100. Deal completion is subject to customary conditions and approvals from the Namibian authorities, Ministry of Industries Mines and Energy and Upstream Petroleum Unit at the State House.
A one-time cash consideration of US$2.7 million is payable at deal completion.
If BP and its partners elect to enter the second renewal period of the license term in 2028 and commit to drilling an exploration well, Eco will have the option to either exercise a put option to transfer an additional 10% participating interest to BP in exchange for a full carry on Eco's remaining 15% participating interest subject to a cap of $21 million net to Eco for each well on each of the licenses; or elect to retain its 25% participating interest of the costs associated with such drilling of a well during the second renewal period.
The maximum aggregate carry consideration payable by BP in respect of each put option is $63 million with a cap of $21 million per put option.
Eco can elect to retain its 25% paying interest or to farm out to other potential partners.
Eco will use deal proceeds to support its ongoing exploration and appraisal activities across its Atlantic Margin portfolio and for general working capital purposes.