Eco Atlantic (AIM: ECO) to acquire JHI Associates to gain Falkland Islands foothold alongside Navitas Petroleum

Eco (Atlantic) Oil and Gas Ltd (AIM: ECO, TSX-V: EOG) has signed a binding agreement to acquire the remaining shares of JHI Associates, Inc. in an all-stock transaction valued at approximately US$52.3 million based on a 30-day volume-weighted average price, or approximately US$62.6 million at the AIM mid-market close of 48.5 pence on 10 March 2026. The deal gives Eco Atlantic a 35% working interest in the PL001 licence in the North Falkland Basin, positioned directly adjacent to the Sea Lion oil field, which reached its long-awaited Final Investment Decision in December 2025 under operator Navitas Petroleum. ECO shares have surged sharply in recent months, rising from a 52-week low of 6.79 pence to a recent close around 54.75 pence, reflecting growing market appetite for the company’s Atlantic Margin expansion story. The acquisition also adds a 17.5% participating interest in the Canje Block offshore Guyana, though that licence lapsed on 4 March 2026 and remains subject to ongoing extension discussions with the Government of Guyana.

What does Eco Atlantic’s acquisition of JHI Associates mean for its Falkland Islands strategy and Atlantic Margin positioning?

The transaction is less a pivot than an acceleration. Eco Atlantic has been methodically assembling Atlantic Margin acreage across Namibia, South Africa, and Guyana for several years, operating largely in frontier exploration mode with limited near-term production catalysts. The JHI acquisition changes that calculus by inserting the company into a basin that is now transitioning from chronic promise to active development. PL001 sits immediately adjacent to the Sea Lion licence area in the North Falkland Basin, covering 1,126 square kilometres at water depths of 400 to 500 metres. Two legacy wells within PL001 recorded oil shows, and the block sits within a proven Lower Cretaceous petroleum system. A third-party competent person’s report estimated an aggregate 3.1 billion barrels of prospective recoverable resources on an unrisked best-estimate basis, a number that will attract attention even with significant risk adjustments applied.

Critically, the proximity to Sea Lion’s planned production infrastructure creates a tie-back optionality that did not exist before FID. Once the Sea Lion FPSO is operational, nearby discoveries become commercially viable at thresholds that would be unworkable in a greenfield context. That infrastructure leverage is what makes the PL001 position materially different from a standalone exploration licence in a remote basin. Eco Atlantic has effectively converted an expensive adjacency risk into a funded exploration option with a commercially de-risked exit pathway.

How does the Navitas Petroleum farm-in and carry arrangement reduce Eco Atlantic’s capital exposure in the North Falkland Basin?

The capital structure of this deal deserves careful attention. On 2 March 2026, Navitas Petroleum agreed to farm into PL001 for a 65% working interest, effectively taking operatorship of the block. As part of that farm-in, Navitas provided JHI with a fully funded carry loan covering the cost of an exploration well and a potential appraisal well, up to US$14 million net to JHI’s 35% share. Eco Atlantic, by acquiring JHI, assumes the benefit of that carry. The loan is structured to be repaid from 85% of JHI’s free cash flow from production, but only if production is established. This means Eco Atlantic secures Falkland Islands exploration exposure with no expected additional capital outlay on the planned well program.

For a company that carried approximately US$4.7 million in cash and no debt as of March 2025, the carry arrangement is structurally significant. Exploration in the North Falkland Basin at the required water depth and well complexity would ordinarily demand tens of millions of dollars in equity contributions. The farm-in deal effectively shifts that burden to Navitas, which has both the balance sheet and the strategic incentive to advance exploration activity around its Sea Lion infrastructure hub. Eco Atlantic’s primary condition is simply closing the transaction, which is itself subject to a Falkland Islands Government licence extension on PL001 beyond its current December 2026 expiry, and a two-thirds vote approval by JHI shareholders at a special meeting within the next four weeks.

Why is the Sea Lion FID a transformational inflection point for exploration activity in the North Falkland Basin?

The Sea Lion project spent fifteen years navigating a succession of financing obstacles, cost revisions, regulatory hurdles, and operator changes before Navitas Petroleum and Rockhopper Exploration finally took a Final Investment Decision in December 2025. Phase 1 targets 170 million barrels with peak production of approximately 50,000 barrels per day and is scheduled for first oil in the first half of 2028, at a total post-FID funding requirement of US$1.8 billion to first oil and US$2.1 billion to project completion. Phase 2 is expected to recover a further 149 million barrels. The development will use a redeployed and upgraded FPSO vessel, with 11 subsea wells tied back to it.

The strategic implication for the wider basin is significant. Before FID, the North Falkland Basin was effectively a stranded exploration province: commercially attractive discoveries existed on paper but lacked any infrastructure to monetise them. With the Sea Lion FPSO confirmed and engineering contracts signed, the economics of adjacent exploration have shifted decisively. Tie-back development to a producing platform requires a fraction of the standalone development cost, and the existence of a proven operating environment reduces subsurface and regulatory risk for nearby licence holders. For Eco Atlantic’s new 35% position in PL001, which is identified as directly adjacent to the Sea Lion development area, this represents a once-in-a-basin-cycle entry window.

What is the current status of the Canje Block in Guyana, and how material is it to the JHI acquisition thesis?

The Canje Block offshore Guyana carries more uncertainty than PL001 and should be treated as optionality rather than core value in the near term. The block is operated by ExxonMobil with partners TotalEnergies and Mid Atlantic O&G, and JHI holds a 17.5% participating interest. The Canje licence lapsed on 4 March 2026, and extension discussions with the Government of Guyana are ongoing. The transaction is expressly not conditional on the Canje extension being granted, which means Eco Atlantic will proceed with or without it.

The geological thesis for Canje remains credible on its own terms. The block sits directly north of the Stabroek trend in the same petroleum system as a string of ExxonMobil discoveries that have made Guyana one of the most consequential deepwater provinces of the past decade. Modern 3D seismic data has identified multiple prospects supported by amplitude versus offset and direct hydrocarbon indicators. However, without a confirmed licence extension, the asset is effectively in limbo. Eco Atlantic’s CEO noted in the announcement that discussions with the Government of Guyana regarding the appraisal and exploration programme on the Orinduik Block are also ongoing, suggesting the company views Guyana as a medium-term platform rather than an immediate catalyst.

How does the all-stock consideration and share dilution affect existing Eco Atlantic shareholders and the deal’s financial logic?

The acquisition consideration is entirely in shares, with no cash payment. Eco Atlantic will issue up to 96,307,811 new Common Shares, representing approximately 21.8% of the post-closing issued share capital. The exchange ratio was fixed at 0.7054 Eco Atlantic shares for each JHI share, anchored to the 30-day volume-weighted average price on the TSX Venture Exchange ending 9 March 2026 of CAD$0.7362. At the AIM closing price of 48.5 pence on 10 March 2026, the implied deal value rises to approximately US$62.6 million, a premium to the TSX-based reference.

The dilution is material but structured with partial lock-up provisions that limit near-term selling pressure. Approximately 45% of the Consideration Shares will be subject to lock-up arrangements spanning 18 months following completion, with the remainder released in tranches of 10%, 10%, 10%, 20%, and 50% at intervals of closing, three months, six months, twelve months, and the earlier of September 2027 or the date on which the first offshore well in the Falkland Islands is spudded. The staggered release tied to drilling activity is a structurally sensible mechanism: it aligns former JHI shareholder incentives with the exploration milestones that will determine whether PL001 delivers on its prospective resource estimates. The gross assets of JHI stood at US$15.3 million as of 31 December 2025 on an unaudited basis, and JHI recorded a loss of US$2.8 million for the financial year ended 31 December 2025, reinforcing that the deal is priced on prospective resource value rather than existing balance sheet metrics.

What execution risks and closing conditions could delay or derail Eco Atlantic’s Falkland Islands entry through the JHI transaction?

The transaction faces several sequenced conditions before it can close, expected in the third quarter of 2026. The most critical is the Falkland Islands Government granting a five-year extension of the PL001 licence, which currently expires on 31 December 2026. Without the extension, the transaction cannot proceed. This creates a single-point dependency on a regulatory decision by a small government overseeing its first major offshore hydrocarbon development. The political dynamics are broadly supportive: the Falkland Islands Government has been actively facilitating Sea Lion’s development, approved the farm-in by Navitas into PL001 as announced on 2 March 2026, and has clear economic incentives to extend productive exploration licences. But discretionary regulatory decisions carry inherent timing risk, and any delay in the extension would cascade into the deal’s closing timeline.

Additional conditions include approval from the TSX Venture Exchange and a two-thirds supermajority vote of JHI shareholders at a special meeting scheduled within four weeks. Directors, officers, and certain shareholders holding approximately 38% of JHI’s voting rights on a fully diluted basis have signed voting support agreements, providing a meaningful base of committed support. The transaction is structured as a plan of arrangement under Canadian corporate law, and Eco Atlantic’s financial adviser PillarFour Capital Inc. will receive US$150,000 in cash and 725,000 Common Shares on closing, a modest fee structure for a deal of this scale. Broader integration risk is low given that JHI’s principal value resides in licence interests and exploration data rather than operating infrastructure. The incoming vice-president Frederick Cedoz, who co-founded JHI and personally structured the Canje and Navitas farm-in transactions, provides continuity of technical and commercial knowledge.

Key takeaways: What Eco Atlantic’s JHI acquisition means for investors and the North Falkland Basin

• Eco Atlantic agrees to acquire 100% of JHI Associates in an all-stock deal valued at approximately US$52.3 million to US$62.6 million depending on share price reference, gaining a 35% working interest in PL001 in the North Falkland Basin.
• PL001 sits immediately adjacent to the Sea Lion oil field, which received its Final Investment Decision in December 2025 under operator Navitas Petroleum, with first oil targeted for 2028 at peak production of approximately 50,000 barrels per day.
• Navitas Petroleum’s farm-in for a 65% stake in PL001 provides Eco Atlantic with a fully funded carry loan of up to US$14 million net to JHI’s share for an exploration and potential appraisal well, meaning Eco Atlantic does not currently expect to contribute capital to the planned well program.
• The deal adds a 17.5% participating interest in the Canje Block in Guyana, operated by ExxonMobil, though the licence lapsed on 4 March 2026 and remains subject to ongoing extension discussions with the Government of Guyana.
• The transaction is conditional on a five-year extension of the PL001 licence being granted by the Falkland Islands Government, a condition that creates timing risk but is supported by the regulatory environment enabling Sea Lion’s development.
• Eco Atlantic’s ECO shares have risen sharply from a 52-week low of 6.79 pence to around 54.75 pence recently, reflecting a broader re-rating as the company’s Atlantic Margin portfolio has attracted new development partners and resource validation.
• Canaccord Genuity Group raised its price target on Eco Atlantic to 105 pence, while Berenberg Bank maintained a buy rating with a 125 pence target, both citing the company’s emerging development exposure.
• The prospective recoverable resources for PL001 are estimated at 3.1 billion barrels on an unrisked best-estimate basis, with over 50 leads and prospects identified on 3D seismic across multiple play levels within a proven Cretaceous petroleum system.
• The all-stock structure with phased lock-up provisions and a drilling milestone trigger for the final tranche aligns former JHI shareholder incentives with Eco Atlantic’s exploration timeline in the Falkland Islands.
• Eco Atlantic’s wider Atlantic Margin portfolio continues to advance in parallel, with Orinduik Block discussions ongoing in Guyana, an active farm-out process on three Walvis Basin blocks in Namibia, and Orange Basin evaluation progressing in South Africa.