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Eco Atlantic Oil & Gas pulls out its own big number offshore Guyana

Published: 06:15 11 Sep 2018 EDT

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Offshore Guyana is yielding huge discoveries

Major nearby successes have been a factor in the rising level of interest in Eco (Atlantic) Oil & Gas Ltd (LON:ECO), whose Orinduik prospect lies adjacent to ExxonMobil’s large oil discoveries off the coast of Guyana.

Now Eco can start to be valued in its own right following a new resource estimate that underlines the potential for a big future at the Orinduik.

WATCH: Eco (Atlantic) Oil & Gas approaching crunch time for its Orinduik block farm-in

Orinduik has been estimated to contain potentially 2.9bn barrels equivalent across ten exploration leads, which would mean that Eco’s 40% stake would be equal to some 1.16bn barrels.

"We have identified the potential for close to 2.5bn barrels of recoverable oil and 2.45 TCF of associated gas.

These are very meaningful numbers for all the partners and most importantly the people of Guyana,” said Colin Kinley, Eco Atlantic chief operating officer.

"Three of the targets we have identified have estimated Probability of Success calculated at 22.4% at this stage.

“This risking is extremely good for any company on a single lead, let alone three.”

READ: Eco Atlantic Oil & Gas boosted by Exxon’s latest Guyana discovery

Kinley added: “We continue to de-risk the play and are approaching this with a conservative and focused approach.

“As our partner, Tullow announced last week, we are planning to drill our first well early Q3 2019 and we are in the process of permitting and engineering in parallel with continuing geophysical and geological assessments."

Final results from a 3D seismic programme completed a year ago is presently being finalised for the final data to be sent to proposed farm-in partner Total this month.

Once it has the data, Total will have 120 days to exercise its option to acquire 25% of Orinduik by paying US$12.5mln to Eco.

Exxon finds over 4bn barrels next door

If Total needed encouragement, it can look next door where Exxon unearthed the Liza field in 2015 and has been making discoveries ever since.

Liza is now estimated at more than 1bn barrels with start-up anticipated by 2020 and a ramp-up to 120,000 bopd production.

In all, Exxon has made nine new discoveries in the adjacent exploration area - Liza, Payara, Liza deep, Snoek, Turbot, Ranger, Pacora, Longtail and Hammerhead.

In total, these finds amount to in excess of 4.2bn barrels of oil equivalent.

The most recent, named Hammerhead, is perhaps particularly interesting for Eco as at just 7km away, it is the closest to Orinduik and, somewhat significantly, it is visible within the 3D seismic data gathered in Tullow’s recent programme.

In this morning’s statement, Colin Kinley added: “The additional discoveries on Exxon's Stabroek Block, including the most recent Hammerhead-1 that is on our 3D survey, enables us to see the formations ramp up onto Orinduik.

“These have greatly helped us to further understand the play. Ten key leads have been identified on Orinduik to date. 

“The partners will carefully consider in the coming months the prioritization of the leads for drilling as we continue work on the drilling engineering and the environmental permitting.”

Shares in Eco rose strongly in anticipation of the announcement and remain close to their all-time high of around 47p, which values the AIM-listed group at a little under £75mln.

Namibia activity also increasing

Earlier this year, Gil Holzman, Eco’s chief executive, had described this year as the best yet for the group.

Assets jumped to C$16mln (C$8.8mln) and cash holdings to C$14.3mln following the subscription from Africa Oil (C$14mln).

Africa is Eco’s strategic partner and took a 19% stake through its subscription.

Eco also holds four licences in the Walvis Basin in Namibia.

Two wells are scheduled to be drilled in the coming year by other operators in the region on their acreage, which Holzman expects will give Eco a much better overall understanding of its blocks.

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