In case investors in Eco Atlantic Oil & Gas Plc (LON:ECO, CVE:EOG) needed more encouragement following the recent deal with Total, they can look again at the exploration success of ExxonMobil, its neighbour offshore Guyana.
Exxon’s latest well Turbot-1, located about 30 miles from Exxon’s large Liza discovery, encountered some 75 feet of high-quality oil bearing sandstone reservoir.
Already Exxon has an estimated 2.25bn to 2.75bn barrels of crude resources and it said the Turbot discovery is a further illustration of the “tremendous potential” offshore Guyana.
Another well is now planned for the Turbot discovery in 2018.
In September, Eco significantly boosted its position offshore Guyana with a new deal potentially adding a blue-chip oiler to the Orinduik exploration project.
It has landed a potential new tie-up with French major Total, joining the venture which is operated by Tullow Oil (owning a 60% stake) and Eco will retain 15% of the project.
Total’s 25% stake acquisition is subject to a review of 3D seismic data from a programme that got underway earlier this month.
The programme is spanning some 2,500 square kilometres, and the results due in the coming months are expected to define targets for a future drill programme. The seismic results will be a potential catalyst for Eco and they will also now trigger Total’s option arrangement.
Eco highlighted on Tuesday that drilling costs will be in the order of US$35mln per well, or US$5.25mln net to the AIM-quoted explorer.
In theory, should Total take up its option, it means that Eco will be funded to progress to exploration drilling.
Tullow’s exploration in the basin
Tullow has a 30% stake in the Araku well in the Suriname portion of the Guyana basin, where drilling is presently underway, and that could provide a further positive catalyst for the emerging exploration frontier.
Araku is seen as a 500 mln barrel exploration target, and if the well proves successful the explorers see more follow on’ potential in the basin.
In a note earlier this week, Jefferies analyst Mark Wilson said: “Attending a Tullow Oil analyst meeting yesterday specifically laid on to discuss its Guyana basin exploration emphasized clearly how the company is ‘reasonably confident its hydrocarbon’ that is generating ‘very large, world class, seismic anomalies’ seen in the Araku prospect,” Wilson said.
“It is hard not to become more positive on such a description alongside the information that 500mmboe is only for the primary target of three separate layers of upper Cretaceous target formations.”