Eco Atlantic Oil & Gas (LSE:ECO) was trading at 50p on Wednesday after reiterating its confidence in its 15pc-owned Orinduik off the shore of Guyana.
Last week saw Eco fall after announcing that samples recovered from the first two oil discoveries at the block – Jethro and Joe – were mobile heavy crudes with high sulphur content. However, in its results for the three and six months ended 30 September 2019, the business it remains optimistic in considering alternative development scenarios for the discoveries.
Alongside its partners at the block, Tullow Oil and Total, Eco has engaged a third-party consultant with heavy oil development expertise to help conduct preliminary evaluations related to production and commercialisation. This work is ongoing, and the joint venture partners are now considering numerous development drilling and production alternatives.
Eco’s president and chief executive Gil Holzman added: ‘We recognise the market reaction to our last announcement on the oil quality discovered at Jethro and Joe and we are grateful for the continued support of our shareholders. This continues to be an exciting time for the Company, as the Orinduik block offers many promising prospects and we continue to work with our partners and third-party experts to evaluate our first two discoveries and determine the 2020 drilling targets and budget. We expect to announce our drilling plans by the end of January 2020, and we look forward to updating our shareholders on this as appropriate.’
We recently took an in-depth look at why the market sell-off in response to the discovery of heavy oil at Orinduik may have been a ‘disproportional overreaction’.
Looking forward at Orinduik, Eco said the partners plan to update their competent persons report (CPR) for the block – potentially by as soon as January 2020. This work will take place once the partners receive the results of a well called Carapa being drilled on the adjacent Kanuku block. A CPR published in March this year suggested that Orinduik potentially contains more than 3.9bn gross prospective oil equivalent resources on approximately 15 identified prospects.
Meanwhile, Eco said that the Orinduik partners are continuing to review several high-graded prospects with a view to exploring them as part of a 2020 drilling programme. To support this, Tullow – in its position as the block’s operating – is preparing a budget for long-lead items such as wellheads and casing.
Elsewhere in its results, Eco said it is continuing to progress its numerous work programmes off the shore of Namibia. It plans to monitor near-term drilling activity in the region and will update the market on developments as needed.
Finally, the company said it currently has CAD $27.9m of cash and cash equivalents on its balance sheet.
‘We ended the first half of our financial year with a very strong balance sheet. After drilling our first two wells in Guyana we now have CAD $27.9 of cash and cash equivalents. These funds will be used to continue the evaluation of our two Guyana oil discoveries and to drill additional exploration and potentially appraisal wells on the block in 2020,’ added Holzman.
To read our recent interview with Holzman, in which he discusses the enormous potential upside yet to be explored by the Orinduik partners, please click here.