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Eco Oil & Gas Ltd. now holds a 75 percent operating stake in Guyana’s Orinduik block having completed the purchase of Tullow Oil PLC’s interest in the offshore project.
Tullow Guyana BV (TGBV), a wholly owned subsidiary of London-based Tullow Oil, divested all its 60 percent interest and operatorship in Orinduik to Eco Guyana Oil and Gas Ltd., a wholly owned subsidiary of Toronto-headquartered Eco Oil & Gas, for $700,000 in cash plus a contingent additional payment.
“Following the closing of the Transaction, Eco is now the Operator of the Orinduik Block and holds, in aggregate, a 75 percent Participating Interest via Eco Orinduik B.V. (60 percent) and Eco (Atlantic) Guyana Inc (15 percent)”, Eco Oil & Gas said in a press release Tuesday. Toqap Guyana BV continues to hold a 25 percent interest.
In announcing the government’s approval of the transaction November 15, Eco Oil & Gas said it has started a farm-out process for the block.
“Eco now seeks qualified partners in this high-value play and has commenced a formal farm-out process for the Block”, Colin Kinley, co-founder and chief operating officer (COO) of Eco Oil & Gas, said in a media statement at the time. “Recent interest from supermajors and other well capitalized energy companies in the latest licensing bid round in Guyana, for blocks up dip of us, supports our thesis of the oil migration and the high quality and charged reservoirs we see on our Block”.
A discovery has yet to be made on Orinduik. Located about 230–4,595 feet under water around 106 miles off the coast, the block sits approximately four miles from the Hammerhead discovery and seven miles from the Liza discovery.
Both discoveries are on Guyana’s Stabroek block, operated by Exxon Mobil Corp. with a 45 percent stake.
“The Orinduik Block sits on the series of continental shelves leading into the [Guyana-Suriname] basin”, Kinley said in the announcement of the acquisition agreement August 10. “This rich and prolific basin is clean sand filled and sealed nicely to trap the massive volumes of oil found thus far”.
In Eco Oil & Gas’ press update for the granting of the acquisition clearance November 15, Kinley declared, “After nearly 10 years of exploration and interpretation, and multiple regional discoveries at the Cretaceous level of close to 11 Billion Barrels of recoverable oil, our team has a good understanding of the Cretaceous play and we have a great deal of confidence in drilling our first well, targeting a stacked pay target in this well proven horizon”.
The upfront cash payment for the purchase from Tullow Oil is just a fraction of the contingent amounts in the event of discovery and commercial development. Under the agreement first announced August 10 Eco Oil & Gas owes Tullow Oil $4 million in the event of a discovery, $10 million upon the issuance of a production license and royalty payments for production. The royalty consists of 1.75 percent of Tullow Oil’s 60 percent participating interest entitlement revenue net of capital expenses and lifting costs.
“On 31 December 2022 as per the audited TGBV financial statements, the gross asset value attributable to the interests being acquired through the Transaction amounted to US$1.5 million, with attributable losses of US$713,000 (excluding a one-off write down of exploration expenses)”, Eco Oil & Gas detailed in the August news release. “As of 31 December 2022, the gross 2C resource [the best estimate of contingent resource] attributable to the transferred interests amounted to 47.7mmbls [million barrels]”.
To contact the author, email jov.onsat@rigzone.com
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