Eco (Atlantic) Oil & Gas Ltd. (EOG), the oil and gas exploration company with licenses in Guyana and Namibia, is pleased to announce its results for the three and nine months ended 31 December 2019, alongside a corporate and operational update.
· As at 31 December 2019, the Company had cash and cash equivalents of CAD $25.4 million with no debt and remains fully funded for its share of further appraisal and exploration drilling at Orinduik Block offshore Guyana of up to US$120m (gross).
· As at 31 December 2019, Eco had total assets of CAD $27 million, total liabilities of CAD $0.3 million and total equity of CAD $26.7 million.
Operations - Guyana
· On 12 August 2019, the Company announced a major oil discovery on its Orinduik offshore petroleum license in Guyana (the "Guyana License"). Evaluation of logging data confirms that Jethro-1 is the first discovery on the Guyana License and comprises high quality oil-bearing sandstone 55m reservoir of Lower Tertiary age. The well was cased and is awaiting further evaluation to determine the appropriate appraisal activity.
· On 16 September 2019, the Company announced a second oil discovery on the Guyana License. Evaluation of MWD, wireline logging and sampling of the oil confirms that Joe-1 is the second discovery on the Orinduik License and comprises a high-quality oil-bearing sandstone 16m reservoir with a high porosity of Upper Tertiary age.
· Both wells were drilled within budget, with MWD logging tool and conventional wireline, and the reservoirs were considered to be high-quality sands with good permeability.
· Fluid samples were taken in both of the wells and were sent for analysis by the Operator. Results of that testing confirm that the samples recovered to date from Jethro-1 and Joe-1 are mobile heavy crudes with high sulphur content.
· Oil tested to date appears not dissimilar to the commercial heavy crudes currently in production in the North Sea, Gulf of Mexico, the Campos Basin in Brazil, Venezuela and Angola.
· The Company has engaged a third-party consultant with heavy oil development and economics expertise to help conduct preliminary evaluations related to production schemes and commercialisation. Technical and commercial evaluation work is ongoing and the Company is considering alternatives for further drilling and testing and a number of development scenarios and production alternatives. The Company remains optimistic in considering the development scenarios and, as the project progresses, will provide further information on plans and timing.
· 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.
· The Block operator has proposed a further fine tuning analysis of the upper cretaceous reservoirs, and the Operator has announced a plan to incorporate the Carapa well data into Orinduik's existing geological models and technical analysis over the coming period. Further, the partners plan to integrate the discoveries at Jethro and Joe with the Carapa discovery with the rest of the regional data now available and to incorporate 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, prospects maturation and target selection on the Block are ongoing, and the JV Partners are working closely to agree the best work program to further explore the prospectivity of the license.
· Multiple prospects are currently being reviewed with high-graded candidates under consideration for the next drilling programme.
· Eco is fully funded and is pushing to drill a minimum of at least one upper Cretaceous target as soon as practically possible for its partners. Consideration is being given to prioritise a stacked multi-target well.
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 continues to progress its various work programmes offshore Namibia.
· Eco sees an increasing interest in Namibia by major companies and large IOCs. The Company plans to monitor near-term drilling activity in the region and will update the market on developments as appropriate.
Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented:
"After completing a successful drilling campaign in 2019, we continue to benefit from a very strong balance sheet and remain fully funded to conduct further exploration and appraisal drilling activity on the Orinduik Block. Our recently updated CPR reaffirms the high prospectivity of the license and the considerable upside potential contained within the Tertiary and Cretaceous horizons. As such, the JV Partners are working on incorporating the learnings gained from other regional discoveries, such as the Carapa well result, into our existing geological models, as this will enable us to identify the most high value targets on the Block.
"While it is Eco's intention, and there remains the potential, to conduct a drilling program later this year, the need to integrate the new data learned from recent discoveries in the region into our understanding of the Block's geology may result in further drilling and appraisal activity taking place in H1 2021. However, a final decision on further drilling activity and the overall budget will be made in the coming months. It is important to note that we remain convinced of the significant upside of Orinduik, are well funded, have strong shareholders and partners, and are confident that further drilling activity will be conducted as soon as practically possible and will prove the Block's potential."