Eco Atlantic Oil & Gas (LSE:ECO) sat at 146p on Thursday after revealing a strong set of financials in its results for the three months ended 30 June. The business, which holds licences in Guyana and Namibia, ended the quarter with cash and cash equivalents of CAD$25m (£15.37m). As of today, this figure has increased to CAD$35.7m (£21.95m)
Meanwhile, as at the end of the results period, Eco had total assets of CAD$43.8m (£26.93m) against total liabilities of CAD$5.7m (£3.51m) and total equity of CAD$38.1m (£23.41m).
The period saw Eco soar announce a ‘revolutionary’ discovery at its licence off the coast of Guyana. Earlier this month, the firm said the Jethro-1 exploration well drilled on its part-held licence on the Orinduik block hit 55m of net high-quality oil pay in ‘excellent’ lower tertiary sandstone reservoirs. According to the company, these findings support recoverable oil resources. As such, the well has now been cased ahead of further evaluation to determine the appropriate appraisal activity.
Orinduik is adjacent and updip to ExxonMobil and Hess Corporation’s Stabroek Block, on which twelve discoveries have been announced, and over 5.5bn boe recoverable resources are estimated. Eco holds a 15pc stake in the licence alongside Tullow Oil, which is the operator and majority owner of the asset with a 60pc stake.
The remainder of the licence is owned by Total, which exercised an option to farm-in to part of Eco’s stake earlier this year. The major’s move followed the release of a maiden competent person’s report for Orinduik, which put the block’s prospective resources at an impressive 2.9 billion BOE across ten leads. For an initial $1m, Total purchased the right to buy a 25pc stake in Orinduik from Eco for $12.5m within 120 days of receiving a complete set of 3D seismic data. As a result of the farm-in, Eco has previously said it will be fully funded for the cost of two-to-three wells at the block without raising additional funds.
At the time, Tullow said that the discovery at Jethro-1 ‘significantly de-risks’ other Tertiary age prospects within the offshore licence area. Among these is the upper tertiary Joe prospect, where drilling will begin later this month once work has finished at Jethro-1. Joe is a 150MMboe Upper Tertiary target with a 43.2pc chance of success, as estimated in a recently published report over Orinduik by Gustavson Associates. Meanwhile, a non-operated well called Carapa 1 will be drilled later this year on the adjacent Kanuku licence to test the Cretaceous oil play – opening up the possibility for further de-risking.
Discussing Friday’s results, Eco’s president and chief executive Gil Holzman said: ‘We ended our first financial quarter (30 June 2019) with a very strong balance sheet, which has enabled us to comfortably and successfully drill our first well and announce our first discovery offshore Guyana. This was the first well of our 2019 drilling program and begins a period of significant exploration activity. The drillship is on its way to our next target in Guyana, Joe-1, where we will, together with our partners Total and Tullow Oil (operator), commence the spudding of our second well in the coming days and expect to have results in second half of September.
‘The year-to-date has been a transformational period for the Company, and with a significant oil discovery, a very strong balance sheet and a portfolio rich with prospects and opportunities in both Guyana and Namibia, we look forward to an exciting future.’