Westmount Energy (LSE:WTE) said it welcomes the acquisition of JHI Associates by Eco Atlantic Oil and Gas (AIM:ECO) which it beleives "represents a significant growth opportunity".
It also offers "synergies and potential cost savings across an enlarged portfolio", Westmount added, whilst confirming that intends to vote in favour of the deal in an upcoming shareholders meeting.
Under the deal terms, Eco will exchange 0.7054 common Eco shares for each JHI share and may issue up to 96.31m new Eco common shares, which would represent approximately 21.8% of Eco's enlarged issued share capital.
Westmount holds 5.69m JHI common shares and 50,000 warrants, and 1.5m Eco common shares and has a memorandum of agreement to buy, conditional on closing, 4m Eco shares for a nominal amount (equivalent to 5.67m JHI shares), with those purchased shares subject to lock-up provisions. On completion, after conversion of Westmount's JHI holdings under the exchange ratio and the conditional purchase, Westmount will hold a total of 9.53m common shares in Eco.
Westmount added that JHI shareholders will gain access to pre-funded, high-impact drilling opportunities in Block 3B/4B offshore South Africa, the Orinduik Block offshore Guyana and Licence PL001 offshore the Falklands and will also benefit from Eco's partnership with Navitas and Eco's farm-down to BP on three Walvis Basin licences, noting that drilling and licence activity remain subject to outstanding government discussions and approvals.
The next milestone is the JHI shareholders meeting on 12 May.
