Eco Atlantic (AIM:ECO) has agreed to farm down a 60% participating interest (PI) in its three Walvis Basin petroleum exploration licences (PEL97, PEL99 and PEL100) to BP Namibia Energy Ltd and transfer operatorship to BP, the company said.
Eco will retain a 25% PI in each licence and receive a one‑time cash consideration of US$2.7 million on completion.
Under the farmout agreement, BP will become operator with a 60% PI; Eco’s wholly owned Namibian subsidiaries will hold 25%; NAMCOR will retain 10% and local partners will hold the remaining 5% (Tangi Trading Enterprise CC on PEL97, Lotus Exploration (Pty) Ltd on PEL99 and Moonshade Investments (Pty) Ltd on PEL100). BP will carry 100% of Eco’s 25% retained PI and Eco’s proportionate share of the NAMCOR (10%) and local partner (5%) PI carry against the current exploration phase.
The deal includes an option tied to the licences’ Second Renewal Period in 2028. If BP and partners elect to drill, Eco can either (i) exercise a put to transfer an additional 10% PI to BP in exchange for a full carry on Eco’s remaining 15% PI (subject to a cap of US$21 million net to Eco for each well on each licence); or (ii) retain its 25% PI and fund its share of the well. Should all three put options be exercised, the maximum aggregate carry consideration payable by BP is US$63 million, with a US$21 million cap per put option.
The Cooper, Guy and Tamar licences have a combined book value of US$10.95 million and Eco’s spend on the Namibian licences for the year to 31 March 2025 was approximately US$1.4 million, the company said. Eco added that the transaction “enables the Company to substantially reduce its funding exposure while retaining material upside exposure to the licenses and introduces a major international operator to progress exploration activities.”
"This successful farm down of our Namibian Walvis Basin Licenses marks an incredible moment for Namibia, for Eco Atlantic and its shareholders." Gil Holzman, President and Chief Executive Officer, said.
The cash proceeds will be used to support Eco’s wider Atlantic Margin exploration and appraisal work and for general working capital. Gil Holzman added: "We look forward to continuing our excellent working relationship with BP's dynamic and experienced team and welcome them to the Land of the Brave."
