What it does
Eco Atlantic Oil & Gas Ltd (LON:ECO) owns a 15% stake of the Orinduik licence offshore Guyana in the Atlantic Ocean, developed with French giant Total and Irish explorer Tullow Oil.
A farm-out with Total saw its stake reduced from 40% in return for a cash payment of US$12.5mln.
Away from Guyana, Eco owns four licences off the coast of Namibia including 57.5% of the Cooper Block
In January 2021, the company launched a new renewable energy business.
It owns a 70% stake in Eco Atlantic Renewables and has funded the new venture with a US$6mln loan – the first US$1.1mln paid for the first acquisition, a ready-to-build 10.57 MW project in Greece.
How is it doing?
Previously, Eco and its partners made two discoveries in the Guyana licence though the oil was found to be heavier than expected.
The next phase of exploration drilling is due to be decided over the coming months, with news expected in the latter part of the second quarter.
A 2020 competent person’s report upgraded the amount of oil at Orinduik by 29% to 5.14bn barrels (p50) or a net 771mln barrels to Eco for its stake.
The report saw 22 prospects of which 11 are in the upper cretaceous horizon, where oil is expected to be lighter and more commercial than the heavy oil discoveries in the tertiary layer.
Leads in the tertiary horizon are estimated to contain 1.2bn barrels while the cretaceous section contains an estimated 3.94bn barrels with two targets in this section (Amaila/Kumaka and Iatuk-D) each containing 725mln barrels.
Over half of the 22 prospects have a 30% chance of success or greater, said the CPR.
In 2021, further third-party drill activity nearby can continue to bolster Guyana’s emerging offshore oil industry.
Eco has set up a new company, Eco Atlantic Renewables, which will seek to source, acquire, and develop exclusive renewable solar energy projects.
The new company is a joint venture with Nepcoe Capital Partners, a UK based renewables investment firm, which is providing exclusive access to a pipeline of opportunities with potential for up to 2 gigawatts of solar generation capacity.
Most of the projects are located in Southern Europe's ‘high solar hours' sunbelt.
The venture’s first acquisition is the Kozani project in Greece which is fully licensed, permitted and ready-to-build. The 10.57 megawatt project was acquired on Monday, with €1.1mln paid by Eco Atlantic Renewables.
Eco Atlantic Renewables envisages further deals – with the company targeting 100 MW worth of operating and grid-connected projects in its first year of operation, plus up to 800 MW of in-development assets.
What management says
"We are not a management team that likes to sit and wait for outcomes,” said Gil Holzman, Eco chief executive in a statement.
“Following several months of extensive strategic work and identification of multiple projects by the management team and Board of Directors, this exciting opportunity has crystalised.
“Our decision to form this new majority held renewable energy company was partly driven by a lack of oil and gas acquisition opportunities that are as good and as prospective as the ones we already hold,” Holzman added.
What brokers say
Stockbroker Peel Hunt sees the offshore explorer as a ‘buy’, in September 2020, pointing to substantial upside to the current price. Analyst Matt Cooper initiated Peel Hunt’s coverage of Eco with a 100p price target, compared to a prevailing market price of 22.7p per share.
Cooper, in a note, described the company’s upcoming exploration campaign as “one of the most exciting” slated for 2021.
In November, a note from Align Research described the prevailing share price as a good buying opportunity whilst setting a 123.54p price target, compared to a market price of 24.35p.
Previously SP Angel highlighted that Eco’s success as a frontier explorer has not been reflected in its share price at all. The junior’s two large discoveries at Orinduik will be followed by two further wells planned for next year while drilling offshore Namibia is also due to accelerate this year.
SP Angel says the discoveries have been misunderstood by the market.