Eco (Atlantic) Oil & Gas Ltd (AIM:ECO, TSX-V:EOG) shares are tipped to at least treble in price as it beefs up its exploration portfolio today.
The company has agreed a US$52mln share-based deal to acquire JHI Associates Inc, an explorer offshore Guyana which is a minority partner to Exxon in the Canje block.
Eco said the deal adds to its strategic acreage position in Guyana and paves the way for further drilling activity over the coming years. It followed the completion of a separate transaction in South Africa, to acquire Azinam Group, to pick up a drill-ready project in the Orange basin, where a well is planned later this year.
“The acquisition of JHI and Azinam in quick succession means Eco now has one of the most existing pure exploration portfolios in the sector,” said Peel Hunt analyst Matt Cooper.
Peel Hunt has a ‘buy’ rating for Eco with 100p price target (versus the current price of 29p) though Cooper says the stockbroker will update its numbers shortly, in light of the JHI acquisition.
“Canje is outboard and adjacent to the Starbroek block, one of the most successful exploration blocks globally, in which Exxon has discovered more than 10bn barrels of light oil to date.
“Three wells have been drilled so far in Canje (Bulletwood-1, Jabillo-1 and Sapote-1), although commercial volumes of hydrocarbons have not yet been penetrated. Analysis of data from these wells is currently being evaluated to inform further drilling in 2022-23”
“JHI plus the recent Azinam acquisition give Eco an attractive and diverse Atlantic margin exploration portfolio, in our view, in an environment where over US$100 per barrel Brent means exploration activity could be about to take off.”