Exploration could be a key driver for Eco Atlantic Oil & Gas Ltd's (LON:ECO, CVE:EOG) partner Tullow Oil PLC (LSE:TLW) going forward, according to VSA Capital analyst Edward Vaughan, who repeated a ‘buy’ recommendation for the AIM-quoted firm.
Vaughan’s target price of 25p suggests some 50% upside to the current price of 17.3p.
Tullow is kicking off a South American exploration campaign with a high-impact well in Suriname, and seismic programmes are already underway in Guyana where Eco has a 40% working interest in the large Orinduik area.
Earlier this year, Tullow and Eco more than doubled the size of the Orinduik 3D seismic survey up to 2,550 square kilometres.
The Orinduik Block is located up dip and just a few kilometres from Exxon's massive Liza and Payara discoveries, which could come online by 2020 - to yield some 120,000 barrels of oil per day in the initial production phase.
Tullow could potentially start Guyana drilling in the Kanuku licence area (where it is partnered with Repsol) as soon as the 2018/19 exploration season.
Ian Cloke, Tullow vice president for new ventures, in this morning’s statement said the company is seeking low-cost, light oil in geologies and geographies that it knows well in Africa and South America.
Specifically, he highlighted that the company is in “an excellent position as we decide what and where to drill in 2018 and beyond, with substantial prospects in Guyana, Suriname, Mauritania and Namibia all under evaluation."