Eco Atlantic enters 2019 with vigour

Oil and gas exploration company Eco Atlantic updated the market on the first three quarters of its financial year on Wednesday, reporting that it ended its third quarter with cash and cash equivalents of CAD 25.7m (£14.71m), total assets of CAD 28.1m, total liabilities of CAD 0.8m and total equity of CAD 27.3m.

The AIM-traded firm said that as a result of the Total farm-in deal income, which amounted to CAD 16.8m ($12.5m), it completed the three and nine month periods ended 31 December with a net profit of CAD 14.4m and CAD 11.3m, respectively.

On the operational front, in Guyana, Eco announced the filing of a National Instrument 51-101 compliant resource report on the Orinduik Block, with 2.9 billion barrels of oil equivalent prospective resource at P50 best estimate.

The report did not take into account certain recent developments, including ExxonMobil's Hammerhead-1 tertiary discovery and additional tertiary prospects.

On 27 November, Eco completed the Total farm-in deal, and received the $12.5m and all necessary approvals and documentation to effect the 25% interest transfer in the Orinduik Block to Total.

As a result, the working interests in the Orinduik Block were now the operator Tullow at 60%, Total at 25% and Eco at 15%.

On 5 December, Eco announced its first planned well out of two in the 2019 drilling program for the Orinduik Block.

The net cost of the first well, named the Jethro-Lobe prospect, was currently expected to be around $7.6m.

Eco said the prospect, which would be drilled from a conventional drillship, was an Upper Tertiary stratigraphically trapped canyon turbidite in about 1,350 meters of water.

The prospect was estimated to hold 250 million barrels of gross prospective resources, with the 'chance of success' estimated by Eco to be 44%.

On 20 February, Eco announced that, along with its partners, Total and Tullow, it had contracted a rig - the Stena Forth - to drill the Jethro-Lobe prospect on the Orinduik Block, offshore Guyana.

The Stena Forth, which was currently drilling off West Africa, was fully crewed and operating.

Eco said the contract with Stena secured the rig for transport at the end of May, targeting an early June spud date.

Additionally, the agreement also defined a window for a second well on the Orinduik Block, which would be drilled after the Jethro-Lobe well.

Long lead items, including the well heads and casings for two wells, had been secured and ordered.

The Orinduik joint venture partners were currently reviewing plans and prospects for a second well, with Eco saying they anticipated formalising those plans in the coming weeks.

It said the anticipated cost of a second well was expected to be less than the first, as the costs for the mobilisation, demobilisation, well heads and casings were already included in the budget for the first well.

In Namibia, Eco said it was granted a one-year extension to the first renewal exploration period on all of its licenses in the country to March 2019 by the Namibian Ministry of Mines and Energy.

Each license would then automatically enter the second renewal period, which in turn had a two-year exploration phase which could be extended by a third year at the discretion of the ministry.

The company also acquired the remaining 10% of the shares of Pan Africa Oil Namibia.

Following completion of the acquisition, PAO Namibia became a wholly-owned subsidiary Eco, and as a result, its working interest in the Tamar License - PEL 50- increased to 80% from 72%.

On 26 October, Eco said it received a formal notice from Tullow Namibia informing that it had elected not to enter into the second renewal period for the PEL 30 License on the Cooper Block.

As a result, Eco automatically received back Tullow Namibia's 25% working interest, and now held a 57.5% working interest in PEL 30.

Eco said it was continuing to monitor developments in Namibia, specifically the recent entries by ExxonMobil and Kosmos Energy, and the planned 2019 wells by Total and Royal Dutch Shell.

On the corporate front, on 20 February Eco announced the appointment of Stifel Nicolaus Europe and Joh. Berenberg, Gossler & Co as its joint corporate brokers with immediate effect.

Eco noted that it was ranked second in the energy sector on the 2019 TSX Venture 50, up from fifth in 2018.

The board said that marked the second consecutive year it had been included in the TSX Venture 50 - an annual ranking of the top-performing companies on the TSX Venture Exchange.

“We are pleased to report that we started calendar year 2019 with the same intensity with which we ended 2018,” said Eco Atlantic president and chief executive officer Gil Holzman.

“During the first two months of 2019, following the announcement of our initial drilling program on our Orinduik Block offshore Guyana, we, together with our partners on the block, have signed a drilling contract and confirmed our intention to spud the first well during the second quarter of 2019.

“The completion of Total's farm-in to our block and the receipt of $12.5m, together with our existing cash resources, means that we are fully funded for at least two wells on our high impact 2019 drilling program in Guyana.”

Holzman said that with Eco’s “strong” balance sheet, it remained in a robust financial position.

“On the corporate side, we appointed two of the leading UK and international investment banks, Stifel Nicolaus Europe and Joh. Berenberg, Gossler & Co as our joint corporate brokers. Berenberg and Stifel will work alongside our existing corporate broker Pareto Securities and Strand Hanson, the Company's nominated adviser.

“These additions will broaden and strengthen our brokerage and market making performance.

“We look forward to updating the market on the selection of the second target well to be drilled on the Orinduik Block, immediately after the Jethro-Lobe well, and we are very excited by this opportunity to hopefully discover very significant oil resources in the coming months.”