Eco Atlantic Oil & Gas Ltd's offshore Guyana acreage has 5bn barrels gross

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 where Tullow was the operator but decided instead to focus on Guyana.

Eco’s exploration licence at Cooper runs for another three years with a drill ready target (The Osprey Prospect) and it is looking for another partner to help fund the programme.

How is it doing?

Eco made two discoveries in the Guyana licence: the Jethro-1 well encountered 55 metres of net high-quality oil pay, while the Joe-1 well encountered 16 metres of continuous thick sandstone.

Further analysis revealed the reservoir to have a heavier grade than expected, with high levels of sulphur, making it more expensive to be flown on surface and to be treated by refiners.

The company said it will need a higher capital expenditure, but there are chances to tap into the market gap left by Venezuela, where production has tanked leaving many refineries on the US Gulf Coast thirsty for its heavy oil.

The AIM-listed oiler is planning the next steps with joint venture partners to potentially test additional targets, as the block is estimated to hold 20 prospects.

CPR

In February 2020, a competent person’s report upped the amount of oil at Orinduik by 29% to 5.14bn barrels (p50) or a net 771mln barrels to Eco for its stake.

The competent persons report (CPR) identified 22 prospects of which 11 are in the upper cretaceous horizon, where oil is expected to be lighter and more commercial than recent 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.

Colin Kinley, Eco’s chief operating officer commented: "The understanding of our resources has gained strength and momentum with the discoveries we made in the Tertiary last summer and the recent discovery of light oil in Carapa-1, made on the Kanuku block to the south of us.

"Our choice was to first test the Tertiary section and to take the risk of opening a new play and a new opportunity for Guyana."

He added: "As previously announced, this younger section delivered a significant resource of heavy oil pay.

"The Cretaceous pathway of lighter weight oils from the source kitchen to the north, through the Liza sands and through the recent discovery of light oil in Carapa-1 to the south confirms our theory and interpretation of transmission of high-quality oil across the Cretaceous sand channels and traps within the Orinduik Block.

Kinley concluded: "We have seen a growth of the overall oil numbers with the thickness of section and a greater understanding of the areal extent and thicknesses of our sands. Our confidence in the play continues and was greatly enhanced with the now proven light oil in the Cretaceous section immediately to the south."

What the boss says, chief executive Gil Holzman

“The issue is the relative challenge of surfacing the oil. In our case we see many supporting ingredients that suggest the oil is commercial and producible.”

“With the shutdown of the Venezuela heavy crude industry, basically, many US Gulf Coast refineries are actually very thirsty for this kind of crude, some have sent idle and some have paid premium to Brent price in order to get this heavy oil… There is very big demand.”