Malcy’s Blog – Oil price, Eco (Atlantic) Oil & Gas & finally

WTI $43.06 +64c, Brent $46.06 +$1.10, Diff -$3.00 +46c, NG $2.71 +6c

By Malcolm Graham-Wood

Oil price

Onwards and upwards, oil is side by side with the vaccines on the optimism front and combine that with a possible Opec+ agreement next week, a Yemeni Houthi attack on an Aramco installation in Jeddah and a weak dollar continues its strong rally. The Trump administration has started the transition process, partly with the Senate majority in mind although carrying on after Thanksgiving Day might have prejudiced those votes.

Its a big case of look at the curve, it looks like we might see the ‘B’ word as there are the signs of a ‘back to the future’ appearing in particular for Brent that is over 15% off the bottom. G Sachs chose to downgrade their oil price forecasts on 11/11 which rang that bell as is often the case…

Eco (Atlantic) Oil & Gas

Interims to 30th September today along with a corporate and operational update, within the financials there are few of any importance save for the following.

As at 30 September 2020, the Company had cash and cash equivalents of US$17.2 million with zero debt and  Eco remains fully funded for its share (15% WI net) of its planned two exploration wells at Orinduik Block offshore Guyana.

As with other companies Eco is slashing costs, with a 70% reduction in general and administrative expenses as compared to same six month period in 2019, including travel costs reduction of 82% and office cost reductions of 90% in line with previously reported COVID-19 cost discipline measures.

Enough already, where is Eco and importantly its JV partners with regard to what the market wants to hear about Guyana and the prospects for drilling there? Firstly there has been some COVID effect but in reality it is all about the situation at Tullow who as operator are in the driving seat but not in effective control.

That is because the new Tullow CEO is still getting his feet under the table, it will be interesting to see how it is played out at the imminent Capital Markets Day (to which yet again I have not been invited for presumably not towing the Chiswick company’s line, correctly) in which those who will be attending will hear when Tullow might drill their best exploration prospect.

Because mark my words they can I suggest only keep their JV partners on hold for so long, Eco today say ‘As previously reported, Eco is fully funded for further drilling on the block and, with its JV Partners, is assessing all opportunities available to drill at least two exploration wells into the light oil cretaceous targets as soon as practical’.

Given that it is clear that even Eco, so presumably Total and Qatar Petroleum, are ready to go how long must they wait for Tullow. As I see it  although Tullow have risen today on the back of Eco’s statement unless they are positive at tomorrow’s CMD that might just be given back. The remaining partners are giving TLW every chance and being obvious in allowing them the time to deliver something but not drilling until 2022 seems somewhat galling.

In Namibia ‘Eco continues to benefit from a strategically significant acreage position in-country and is progressing its various work programmes on its four blocks offshore Namibia. The Company has witnessed considerable interest from multiple IOCs in Namibia’ something I have been expecting and there will be plenty of activity nearby.

I have long had a significant respect for Africa Oil which is in no way diminished in recent years, their respect for the partnership with Eco is a valuable support that goes way beyond a significant holding in the company. This is an important statement, ‘The Company, together with its strategic alliance partners Africa Oil Corp., is currently reviewing and evaluating additional assets opportunities in both Africa and South America’.

To me this means that Eco shareholders, who may be disappointed by hold-ups in Guyana, see significant opportunities grabbed elsewhere with their shareholder and strategic alliance partners Africa Oil. Watch this space…

Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented:

 “The Company remains well placed to capitalise on its strategic acreage in both Guyana and Namibia; both prolific hydrocarbon provinces. With no debt and strong cash reserves, Eco remains fully funded for its further near-term drilling plans in Guyana and continues to evaluate additional value enhancing opportunities. 

 “In Guyana, arguably one the most attractive exploration and production regions in the world in the past five years, we are excited to recommence drilling activity in due course and we are aiming to define targets through reprocessing and we hope to have target selection in the next six months allowing us to begin drilling preparation in the second half of 2021. 

 “In Namibia, we have seen a ramp up in activity by other operators towards their respective drilling programmes and we expect any success here to considerably benefit Eco. Namibia continues to become ever more attractive to the major players in the industry, and we look forward to an exciting year of activity in 2021 in country and for Eco.

 “Eco’s resilient business model, along with its strong management, shareholders, and assets in prolific E&P hotpots, means the Company is well positioned to deliver value for shareholders going forward. We very much look forward to keeping the market up to speed on developments for the remainder of 2020 and into the New Year.”

So, whilst there may not be any drilling on Orinduik next year, the company and its JV partners have only so much patience, Eco are fully funded and more and of course should Tullow find that 60% and operatorship of the block be too much at the moment, with Total and of course  Qatar Petroleum in the JV they have a welcome combination of experience and moulah to be able to exit gracefully at least in part…

I have been a big fan of Eco for a long time and whilst the delay in Guyana is a continued disappointment it should be remembered that it hasn’t gone away, for the longer term it will deliver big time and I am increasingly confident that both Namibia and the relationship with Africa Oil will deliver way more than is reflected in the share price…

And finally…

Last night in the Prem Burnley claimed a rare win with a 1-0 victory against the Eagles whilst Wolves and the Saints drew 1-1.

In tonight’s Champions League Chelski go to Rennes whilst Istanbul Basaksehir visit the Theatre of Dreams.

(The opinions expressed here are those of the author, a columnist for Share Talk.)

Malcolm Graham-Wood

Source Link https://www.malcysblog.com/2020/11/oil-price-eco-atlantic-and-finally/

Website Link www.malcysblog.com

Disclaimer: Malcy’s Blog is provided for general information about the international oil and gas industry and the companies that operate within it. It does not constitute investment advice and Malcy does not buy or sell shares, warrants or bonds in any company written about within the blog. Information is taken from publicly available sources and any comment is that of the author who does not take any third party comment in the publication.


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