Eco Atlantic Oil & Gas Ltd (LON:ECO) (CVE:EOG) has revealed the impressive findings of a new resource assessment for the Orinduik Block, offshore Guyana, ahead of exploration drilling later this year.
Consultant Gustavson Associates has estimated some 3.98bn barrels in prospective resources across 15 exploration areas, which for Eco’s 15% stake in Orinduik, equates to 597.3mln barrels net to the AIM-quoted firm.
Gustavson viewed a ‘low case’ estimate of 2.01bn barrels of prospective resources, and a ‘high case’ of 7.2bn - which net to Eco, amounted to 302mln to 1.08bn barrels.
The new assessment follows the completion of the 3D processing and an additional six months of interpretation work. It included processed data from a 2,550 square kilometre 3D seismic programme, and, insights gleaned from regional discoveries (such as Hammerhead) made by Exxon.
"Eco is pleased with the progress made in defining the prospectivity on Orinduik,” said Colin Kinley, Eco chief operating officer.
“As the regional play continues to develop, and more discoveries have been made, particularly in the Tertiary play, as was proven by Exxon's Hammerhead 1 discovery, this has allowed us to build upon our model.”
Well will target the Jethro prospect
Kinley highlighted that the first exploration well will target the Jethro prospect which was estimated at 214.5mln barrels by Gustavson, with a 43.2% chance of success.
He added: The partners are in the process of approving a second well and we believe the risking will be in the same range as for Jethro.
“We hope to confirm drilling plans for well number two in the near future to take advantage of the economics of our rig on the block.”
“We have confidence in our and our partners' work to date, as we continue to work with the industry leading teams at Tullow, who is the operator, and Total, who is a fully engaged partner.
“At this point, we are looking to drill strategic lower risk targets.
“Assuming positive results, we aim to move quickly to production planning and optimum economics for our partnership and the people of Guyana."
Luxury problems to have
In a note to clients, analysts at SPAngel commented: “In what is likely to be the final resources statement before the start of the drilling campaign on the Orinduik block, at a gross predrill estimate of 3,981.9mm boe, this report quantifies and confirms the potential of the licence area.”
They added: “What is interesting to note is that very little is being given away by the Hammerhead discovery already in the block, which given the abundance of high-quality seismic significant improves exploration confidence, even if exploration risks remain.”
The analysts concluded: “Whatever the outcome, that Hammerhead has been observed as coming on to the licence already means that the Company has more than exploration value, but the question is how much.
“These are luxury problems to have, and ones which we believe will result in value creation for the Company and its shareholders.”
In afternoon trading, shares in Eco Atlantic were 2.5% higher at 91.75p.
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