Eco Atlantic Oil & Gas Ltd (LON:ECO, CVE:EOG) chief executive Gil Holzman in Thursday’s quarterly financial results statement described the explorer’s farm-out deal with Total as a “confirmation of the great value”.
AIM-quoted Eco confirmed the completion of the transaction on Wednesday, with the explorer receiving US$12.5mln in cash in return for a 25% stake in the potential high-impact Orinduik offshore acreage.
Funds aside, the addition of Total to the venture provides further validation and confidence for investors who hope that, at Orinduik, Eco can replicate some of the success enjoyed by Exxon in the adjacent Stabroek block (where a series of big oil discoveries have unearthed more than a billion barrels of crude).
Significantly, during the reporting period, Eco revealed new estimates for Orinduik which saw the potential for some 2.9bn barrels of oil resources – which would need to be proven up in the future through drilling.
“We are delighted that Total has exercised their option to farm into 25% of the Orinduik Block, which has added an additional USD 12.5 million to our cash reserves as of today,” Holzman said.
“Having Total as a partner in Orinduik is further confirmation of the great value we see in this asset and our ability to partner with major international oil companies."
He added: "Our prime focus currently is to review, design and approve the drilling programme on our Orinduik Block offshore Guyana, with Tullow and Total, which we expect to execute during the first half of 2019.
“We look forward to keeping the market updated as to our progress and exact drilling plans."
In terms of financials, the pre-revenue explorer reported a US$2.15mln loss for the quarter, with US$1.29mln incurred through operating expenses. And prior to the Total injection, it ended September with US$11.32mln of cash and equivalents.
Elsewhere, in Namibia, Eco retains an interest in the Cooper exploration area with a larger stake following Tullow Oil’s decision in October to exit the venture. Eco now holds 57.5% of the project and intends to seek new major partners to support exploration plans.
At the same time, some attention is being paid to finding new opportunities suited to the company’s expertise.
"We have spent the last few months advancing new asset opportunities in selected regions that fit our model,” Holzman said.
“This included the extension of the current exploration period across all of our Namibian licences through to March 2019, the beginning of the second two-year Renewal Period which has the option to be extended a further year.
“Thanks to our own technical team and partners' work and developments in the Walvis Basin, our geotechnical understanding of the depositional environment and specific areas for hydrocarbon prospectivity has improved.
“With Tullow's withdrawal from our Cooper license, and with recent entries into Namibia by major oil companies, we see an opportunity to bring in other partners to advance our blocks and we are working towards this goal."