Eco Atlantic Oil & Gas (LSE:ECO) has laid out plans to identify “the most high-value targets” on the potentially game-changing Cretaceous horizon at its part-owned Orinduik block off the shore of Guyana.
In its results for the three and nine months ended 31 December 2019, Eco said that Tullow Oil – Orinduik’s operator and 60% owner – has proposed further fine-tuning analysis of the block’s Upper Cretaceous reservoirs. Specifically, Tullow plans to add data from its Carapa well in the Kanuku block just south of Orinduik – where Cretaceous-based light oil was recently discovered – into Orinduik’s geological models and technical analysis.
Meanwhile, the Orinduik partners, which also include Total E&P (25%), will also integrate Carapa and their own Jethro and Joe discoveries into regional data to complete a reprocessing of the block’s 3D seismic. “The intent is to provide further definition to the Cretaceous interpretation and target selection for drilling,” said Eco.
Elsewhere, Eco said that geological modelling, prospects maturation, and target selection at Orinduik are ongoing, with multiple prospects with high-graded candidates under consideration for the next drill programme. For its part, the firm – which is fully funded for its 15% share of costs – is pushing to drill a minimum of at least one upper cretaceous target “as soon as practically possible”.
“Consideration is being given to prioritise a stacked multi-target well,” it added.
The majority (3,926 million barrels of oil equivalent (“MMboe”)) of Orinduik’s 5,141MMboe worth of gross prospective resources is thought to lie in the block’s Cretaceous horizon. Alongside the recent Carapa discovery, the horizon has been de-risked significant by ExxonMobil’s discovery of 8 billion barrels of oil in the play to the east of the block.
As Eco’s chief executive Gil Holzman highlighted to us recently, the upshot of this is that “the Cretaceous horizon is where the real opportunity lies” at Orinduik. Echoing this sentiment, Holzman said it was pivotal to use as much data as possible from recent regional discoveries to identify the most high-value targets on the block.
“While it is Eco’s intention, and there remains the potential, to conduct a drilling program later this year, the need to integrate the new data learned from recent discoveries in the region into our understanding of the Block’s geology may result in further drilling and appraisal activity taking place in H1 2021,” he said.
“However, a final decision on further drilling activity and the overall budget will be made in the coming months. It is important to note that we remain convinced of the significant upside of Orinduik, are well funded, have strong shareholders and partners, and are confident that further drilling activity will be conducted as soon as practically possible and will prove the Block’s potential.”
Elsewhere in Wednesday’s update, Eco said that it had cash and cash equivalents of C$25.4 million as at 31 December with no debt. This leaves the organisation fully funded for its share of further appraisal and exploration drilling at Orinduik of up to $120 million gross.
The company also said that the Orinduik partners’ work with a third-party consultant to come up with a way of producing and commercialising its Jethro and Joe discoveries is “ongoing”. Fluid samples taken from both wells were found to be mobile heavy crudes with high sulphur, similar to commercial crudes currently in production across the North Sea, Gulf of Mexico, and Brazil’s Campos Basin.
“The company remains optimistic in considering the development scenarios and, as the project progresses, will provide further information on plans and timing,” added Eco.
Meanwhile, Eco said that it is continuing to progress various work programmes at its assets off the shore of Namibia. The company noted an increasing interest in the area by major companies, and is continuing to monitor near-term regional drilling activity.