Eco (Atlantic) Oil & Gas Ltd (AIM:ECO, TSX-V:EOG) has struck a deal to acquire significantly more of the Orinduik Block, offshore Guyana, buying out exploration partner Tullow Oil PLC (LSE:TLW).
The AIM-quoted explorer is acquiring the Tullow Guyana subsidiary that holds a 60% operated interest in the high-potential exploration block for US$700,000 in upfront cash and a series of ‘what if’ contingent payments tied to future outcomes.
Eco’s stake in the project jumps to 75%, whilst Total retains a 25% interest.
Tullow will be paid a further US$4 million if a commercial discovery is made from Orinduik, plus US$10 million if such a discovery becomes a producer (when a production licence is issued) and will retain a 1.75% royalty interest over a share of production from a 60% portion of the block.
It comes after previous wells on the block failed to deliver a discovery but significantly, a substantial portion of the block’s prospectivity remains untested.
In particular, the type of exploration ‘play’ that yielded Exxon’s massive nearby discoveries has yet to be drilled in this neighbouring acreage, as under Tullow’s operatorship the partner previously went after alternative targets.
Eco now intends to re-partner and go after these already de-risked prospects.
“We will proactively engage in a farm-out process for this highly prospective license and begin preparations to drill a well testing the cretaceous, where all light oil discoveries have been made in the adjacent Stabroek Block,” said chief executive Gil Holzman.
Colin Kinley, Eco's chief operating officer, added: “Following ten years of basin evaluation and research, we have a solid and highly experienced team to take over the operatorship role.
“We will start by targeting stacked pay opportunities we see in the cretaceous and look forward to continuing our aggressive approach to discovery.
“We see an opportunity in the multi hundred millions of recoverable range and now is the time to drill our targets."