Eco (Atlantic) Oil & Gas Ltd., the oil and gas exploration company with license interests in Guyana and Namibia, is pleased to announce its results for the year ended 31 March 2020, alongside a corporate and operational update.
- As at 31 March 2020, the Company had cash and cash equivalents of CAD $26,482,896 million (US$18,782,196) with zero debt and remains f ully funded for its share of further appraisal and exploration drilling at Orinduik Block offshore Guyana (the "Orinduik Block") of up to US$120M (gross).
- As at 31 March 2020, Eco had total assets of CAD $28,205,351 million (US$ 20,003,795), total liabilities of CAD $496,889 (US$ 333,255) million and total equity of CAD $27,708,462 million (US$ 19,651,392).
Operations - Guyana
- In 2019, the Company announced two oil discoveries, Jethro-1 and Joe-1, on its Orinduik offshore petroleum licen se in Guyana (the "Guyana Licen se"). Both wells were drilled within budget by the Stena Forth drillship, with MWD logging tool and conventional wireline.
- Jethro-1 discovery comprised high quality oil-bearing sandstone 55m reservoir of Lower Tertiary age and was drilled with a net cost to Eco of US$7.6M.
- Joe-1 discovery comprises high-quality oil-bearing sandstone 16m reservoir with a high porosity of Upper Tertiary age and was drilled with a net cost to Eco of US$3M.
- Fluid samples analysis results from both of the wells, sent by the Operator, confirmed that the samples recovered to date from Jethro-1 and Joe-1 are mobile heavy crudes with high sulphur content, which appears not dissimilar to the commercial heavy crudes in nearby Hammerhead discovery and to those currently in production in the North Sea, Gulf of Mexico, the Campos Basin in Brazil, Venezuela and Angola.
- The Company engaged an independent third-party consultant with heavy oil development and economics expertise to help conduct preliminary evaluations related to various production schemes and commercialisation.
- On 3 February 2020, the Company announced the filing of a National Instrument 51-101 compliant resource report on the Orinduik Block, offshore Guyana, which included:
o Significant increase in Gross Prospective Resources to 5,141 MMBOE (771 MMBOE net to Eco) from previous estimate of Gross Prospective Resources of 3,981 MMBOE in March 2019.
o 22 prospects identified on Orinduik Block including 11 leads in the Upper Cretaceous horizon.
o Majority of the project leads have over a 30% or better chance of success (COS), enhanced by the recent discovery of light oil in the Carapa-1 well on the Kanuku Block to the south of Orinduik.
o Leads in the Tertiary aged section estimated to contain 1,204 MMBOE.
o Leads in the Cretaceous section are estimated to contain approximately 3,936 MMBOE.
- In Q1 2020, the Orinduik Block operator proposed a further fine-tuning analysis of the Upper Cretaceous reservoirs, announced a plan to incorporate the Kanuku Block's Carapa-1 well data into Orinduik's existing geological models and technical analysis.
- Further, the partners approved the 2020 budget and are integrating the discoveries of Jethro-1, Joe-1 and Carapa-1 discovery with the rest of the regional data now available and incorporating this data into a reprocessing of the 3D seismic already shot on Orinduik. The intent is to provide further definition to the Cretaceous interpretation and target selection for drilling.
- Geological modeling and prospects maturation on the Orinduik Block are ongoing, which is anticipated to provide further definition to the Cretaceous interpretation and targets' selection for drilling by the end of the calendar year.
- Multiple prospects are currently being reviewed with high-graded candidates under consideration for the next drilling programme. Eco is fully funded for a further drilling programme on the Orinduik Block and plans, subject to JV Partner approval, to drill at least two exploration wells into light oil cretaceous targets in 2021. Further details will be provided to the market in due course.
The Orinduik JV partners are Eco Atlantic (15% working interest ("WI")), Tullow Guyana B.V. ("Tullow") (Operator, 60% WI) and Total E&P Guyana B.V. ("Total") (25% WI).
- Eco's strategic position in-country remains a core part of the Company's investment case. Eco continues to progress its various work programmes offshore Namibia.
- The Company continues to monitor increasing interest in Namibia, which could potentially see up to four exploration wells drilled on behalf of ExxonMobil, Total, Maurel & Prom, and Shell in the next 12 months.
- In light of the COVID-19 pandemic and a lower oil price environment, the Company implemented a strict cost cutting programme throughout the business. The decisive and early action taken yielded significant savings and has ensured the business remains well capitalised, with no debt on the balance sheet, for its 2021 drilling plans.
Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented:
"2019 was a milestone year in Eco's corporate history. We completed a highly successful drilling programme in Guyana, which resulted in two oil discoveries which encountered high quality reservoirs containing mobile heavy crude. The oil we found is similar to other commercial heavy crudes that are planned for production in the area and in production across the world. We remain upbeat about the considerable upside potential that the Orinduik licence possesses, particularly in the Cretaceous horizon which proved to bear light sweet oil in the neighbouring Stabroek and Kanuku Blocks. Following the 2019 drilling campaign, we are now working closely with our JV Partners to incorporate learnings from these and other nearby discoveries, to determine our next drilling targets planned for 2021. We are keen to resume drilling activity on the Orinduik licence as soon as is practically possible and we look forward to updating the market as we finalise our plans for next year.
"In Namibia, we continue to make progress with our workstreams and remain poised to benefit from the uptick in activity planned for the region over the coming 12 months. We have a strategic acreage position in Namibia, which we believe will be highly valuable for us and for potential future partners as near-term further drilling activity in the region takes place.
"At a corporate level, maintaining Eco's balance sheet strength is a key priority. As such, we took decisive action earlier in the year, implementing a strict cost cutting programme, which has yielded considerable savings that are expected to result in almost US$1M in G&A and public company costs savings. We continue to monitor our costs closely and given we have met all of our existing work commitments in Guyana and Namibia for 2020, we only expect to incur minimal costs for the remainder of the year, thus we expect to end the 2020 calendar year with approx US$17M in cash.
"Despite the current macro backdrop, we remain highly upbeat about the coming 12 months. While COVID-19 has had a minor impact on our operations, given Eco's resilient business model and strong cash position, the Company is well placed to navigate the downturn and create significant value for shareholders. We have some of the most attractive acreage positions in two of the most exciting global regions for oil and gas exploration activity, a very strong block partners in Guyana and on the corporate level, and we are well funded to ramp up activity in both jurisdictions as well as other regional opportunities. I look forward to keeping all of our stakeholders updated on our progress over the coming months."