Mr. Gil Holzman reports

ECO (ATLANTIC) OIL AND GAS LTD. ANNOUNCES ACQUISITION OF FURTHER INTEREST IN ORINDUIK BLOCK

Eco (Atlantic) Oil & Gas Ltd. has signed a sale purchase agreement, pursuant to which its wholly owned subsidiary, Eco Guyana Oil and Gas (Barbados) Ltd., will acquire a 60-per-cent operated interest in the Orinduik block, offshore Guyana, through the acquisition of Tullow Guyana BV (TGBV), a wholly owned subsidiary of Tullow Oil PLC, in exchange for a combination of upfront cash and contingent consideration.

The transaction is in line with Eco's strategy to deliver material value for its stakeholders through early entry and exploring for hydrocarbons in some of the most prolific petroleum basins in the world. Eco, through its wholly owned subsidiary, Eco (Atlantic) Guyana Inc., currently holds a 15-per-cent working interest in the Orinduik block. On completion of the transaction, Eco, as operator and majority interest holder in the Orinduik block, intends to drive the exploration process and focus on its strategy to attract new partners to join the licence and pro-actively engage in drilling.

Transaction summary:

• $700,000 (U.S.) cash payment upon transfer of TGBV's 60-per-cent participating interest and operatorship of the Orinduik licence to Eco Guyana, to be paid to Tullow Overseas Holdings BV, the parent of TGBV (TOHBV), on completion of the transaction.
• Contingent consideration payable to TOHBV is linked to the success of a series of potential future milestones as follows:
  • $4-million (U.S.) in the event of a commercial discovery;
  • $10-million (U.S.) payment upon the issuance of a production licence from the government of Guyana;
  • Royalty payments on future production -- 1.75 per cent of the 60-per-cent participating interest entitlement revenue net of capital expenditure and lifting costs;
• Transaction and payment of the initial consideration is subject to certain market-standard conditions precedent, including customary government and JV (joint venture) partner approvals;
• Completion is expected to occur in the second half of 2023;
• On closing of the transaction, the interests of the JV partners in the Orinduik licence will be as follows:
  • Eco will hold an aggregate 75-per-cent participating interest through Eco Guyana and Eco (Atlantic) Guyana and be operator of the block;
  • TQAP Guyana BV will continue to hold a participating interest of 25 per cent.

Gil Holzman, president and chief executive officer of Eco, commented: "We are delighted to have reached this agreement with Tullow and to be able to begin to unlock the Orinduik block's full potential. Since 2014, we have believed in the potential of this block, with our initial two wells in 2019 proving two different oil plays. We will pro-actively engage in a farmout process for this highly prospective licence and begin preparations to drill a well testing the Cretaceous, where all light oil discoveries have been made in the adjacent Stabroek block."

Colin Kinley, co-founder and chief operating officer of Eco, added: "The Orinduik block sits on the series of continental shelves leading into the basin. This rich and prolific basin is clean sand filled and sealed nicely to trap the massive volumes of oil found thus far. Following 10 years of basin evaluation and research, we have a solid and highly experienced team to take over the operatorship role. We will start by targeting stacked pay opportunities we see in the Cretaceous and look forward to continuing our aggressive approach to discovery. We see an opportunity in the multihundred millions of recoverable range and now is the time to drill our targets."

Transaction structure

TOHBV will transfer its entire interest in the Orinduik licence through the sale of TGBV to Eco Guyana in exchange for the initial consideration and a series of contingent payments based on future milestones as described herein.

TGBV holds a 60-per-cent participating interest in and operatorship of the Orinduik block pursuant to: (i) a petroleum agreement between the minister responsible for petroleum representing the government of the Co-operative Republic of Guyana, Eco (Atlantic) Guyana and TGBV dated Jan. 14, 2016 (as amended from time to time); and (ii) the joint operating agreement dated between TGBV, Eco (Atlantic) Guyana and TOQAP dated Jan. 18, 2016 (as amended from time to time). Tullow will retain its interest in the Kanuku block.

Additional cash consideration may be payable to TOHBV, in the form of contingent payments, including a royalty payment, as noted herein, on upstream revenues once production from the Orinduik licence commences.

Subject to the satisfaction of certain market-standard conditions precedent and customary approvals, including government and JV partner approvals, the transaction is expected to complete in the second half of 2023.

On Dec. 31, 2022, as per the audited TGBV financial statements, the gross asset value attributable to the interests being acquired through the transaction amounted to $1.5-million (U.S.), with attributable losses of $713,000 (U.S.) (excluding a one-off writedown of exploration expenses). As of Dec. 31, 2022, the gross 2C resource attributable to the transferred interests amounted to 47.7 million barrels.

About Eco (Atlantic) Oil & Gas Ltd

Eco is a TSX Venture Exchange and Alternative Investment Market quoted Atlantic Margin focused oil and gas exploration company with offshore licence 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 holds a 15-per-cent working interest in the 1,800-square-kilometre Orinduik block operated by Tullow Oil. In Namibia, the company holds operatorship and an 85-per-cent working interest in four offshore petroleum licences -- PELs 97, 98, 99 and 100, representing a combined area of 28,593 square kilometres in the Walvis basin.

Offshore South Africa, Eco is operator and holds a 50-per-cent working interest in block 2B and a 26.25-per-cent working interest in block 3B/4B operated by Africa Oil Corp., totalling approximately 20,643 square kilometres.