Eco Atlantic Oil & Gas Ltd mulls additional exploration wells offshore Guyana

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.

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.”