Eco Atlantic Oil & Gas (LSE:ECO) has unveiled a raft of cost-cutting measures to preserve capital in the face of the Covid-19 pandemic.
The £28 million company, which holds licences across highly prospective regions of South America and Africa, said it has terminated non-core services and travel across all aspects of its business. Meanwhile, its board and management team are voluntarily taking pay cuts of up 40% from this month onward.
Moving forward, Eco said it has met all of its work commitments for 2020 and only expects “minimal” costs for the remainder of the year. As it stands, the company has a healthy $18.8 million of cash and cash equivalents on its balance sheet and no debt.
“The company continues to benefit from its strong balance sheet,” Eco said in a release. “In light of the cost cutting measures described above, preserving the company’s significant cash balance, the board believes Eco will be in a robust position to progress its exploration strategy when market conditions improve and operations are able to resume.”
With respect to the Orinduik block off the shore of Guyana – its flagship operation – Eco said it remains fully funded for its share of further appraisal and exploration drilling. Meanwhile, the firm added that it is working closely with partners Total and Tullow Oil to discuss and plan next steps.
Eco holds a 15% interest in the 1,800 square kilometre Orinduik block. The area is adjacent to ExxonMobil’s Stabroek block, where 8 billion barrels of recoverable oil equivalent (“boe”) is estimated, and north of the Kanuku block, where Cretaceous-based light oil was recently discovered.
Both of these de-risk significantly Orinduik’s own Cretaceous horizon, which is thought to contain 3,926 million boe. Towards the end of February, Eco announced that the Orinduik partners were fine-tuning analysis of the block’s upper Cretaceous reservoirs to identify the horizon’s “most high-value targets”.