By Dr. Michael Green
Well the landscape for Eco Atlantic Oil & Gas just keeps getting even better. The latest news is that TotalEnergies has reported a really significant light oil discovery at its Venus exploration well which, to put it mildly, serves to validates Eco’s early mover exploration strategy.
The Venus exploration well encountered 84m of net oil pay in good quality Lower Cretaceous reservoirs. Reports suggest that the pre-drill resource estimate was something like 1,500 mmbbl which was based on just 60-70m of net pay in the 600km² Aptian aged basin floor fan. TotalEnergies calls the results very promising, but they should be as they are obviously well ahead of the pre-drill expectation.
It has to be pointed out that this latest discovery follows hard on the heels of Shell’s Graf-1 recent discovery. It is only a matter of weeks ago that the Namibian government was able to announce that Shell (45%) and its partners Qatar Energy (45%) and NAMCOR (10%) had made a significant light oil discovery. The Grafff-1 well had been drilled to a total depth of 5,376m in 1,900m of water in the Orange sub-basin in Namibia and encountered oil in two Cretaceous targets.
Shell and its partners were working to assess how much oil may be recovered. However, well-respected energy consultant Wood Mackenzie believes that the well has met its pre-drill estimate of between 500 million and 1 billion barrels; and they have assumed that 700 million barrels is recoverable. Apparently, the rig is expected to immediately drill a second well in order to prove up volumes. To put this into perspective, it is also thought to be Shell’s largest commercial find in Sub-Saharan Africa for more than 25 years since the Bonga deepwater offshore Nigeria discovery back in 1996.
Graff was Namibia’s first oil discovery after what has been something like twenty odd previously unsuccessful wells. The discovery of the presence of a working system with light oil in offshore Namibia is a truly transformational event for the region. Following the Graff-1 discovery, a comment from NAMCOR’s MD Immanuel Mulunga really said it all – “…We hope that this discovery puts to rest doubts about the hydrocarbon potential of Namibia and opens a new dawn in the country’s future prosperity…”
Orange Basin Prospectivity. Source: Company
There is clear delineation of proximity of recent discoveries to Eco’s acreage and no doubt that these play opening discoveries must really establish the deepwater Orange Basin as one of the top areas on the globe for oil exploration. It has to be said that these fantastic results really do serve to properly validate the company’s focus on these highly prospective Cretaceous oil and gas plays in Southern Africa which its team has been painstakingly analysing over the past six years or so.
Eco now has a strong strategic position in Namibia which has been improved by the acquisition of Azinam. Through this deal the company gains additional WI in its current oil blocks and so ends up with an 85% stake in PELs #97, #98 and #99. This is the same sized WI as Eco has at PEL #100 with the company being the operator on all four PELs.
Ownership of Azinam allows Eco to enter into the frontier region of South Africa as the deal added interests in two Orange Basin blocks. Block 3B/4B is directly correlated to the Graff 1 prospect and Block 2B is a shallow water block with a previous light oil discovery.
Eco is acquiring Azinam’s entire offshore asset portfolio in a non-cash deal which involves the granting of a 16.65% equity stake in the enlarged company on completion of the acquisition. This was worth the equivalent of US$11 million at Eco’s share price of 20p when the deal was first announced. In addition, the vendor will also be issued warrants in Eco which are only exercisable on a producible commercial discovery involving 20 million warrants at C$1.00 per share and 20 million warrants at C$1.50 per share.
This is tremendous news for Eco with its strong licence position in Namibia where its four blocks in northern Namibia have more than 2bnbbl of P50 unrisked prospective resources. There had been plenty of interest from the leading international oil companies ahead of these discoveries, which could now generate a veritable feeding frenzy to farm into Eco’s acreage.
Truth is that Eco is exploring for oil and gas in some of the global hotspots in todays’ hydrocarbon world – offshore Namibia and offshore South Africa, along with offshore Guyana. Earlier on in the month CGX Energy and Frontera Energy Corporation announced that the Kawa-1 well in offshore Guyana encountered the 177 feet of hydrocarbon-bearing reservoirs within Maastrichtian, Campanian and Santonian horizons.
CGX and Frontera reckon that these intervals are similar in age and can be correlated using regional seismic data to recent successes in Block 58 in Suriname and Stabroek Block in Guyana. The Kawa-1 well was drilled to a depth of 21,578 feet (6,578m) and targeted the easternmost Campanian and Santonian channel/lobe complex on the northern section of the Corentyne block. All of which shows a growing success story unfolding in offshore Guyana as the country emerges as a global oil and gas exploration hotspot.
We recently updated our research coverage on Eco with a Conviction Buy stance and a target price of 114.65p. Although sitting on a reasonable gain at current price of 36.5p, we reckon there is a lot more to come and are more than happy to conform our stance.
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