Eco in talks with over 9 oil companies for farm-in to Orinduik Block

Stack towers at the Dangote oil refinery and fertilizer plant site in the Ibeju Lekki district, outside of Lagos, Nigeria. Photographer: Tom Saater/Bloomberg

By Jarryl Bryan

Canada-based oil company Eco (Atlantic) Oil & Gas Limited, which went from owning a 15 per cent share of the Orinduik Block offshore Guyana to being the majority shareholder is looking to bring in partners to help it drill for light crude oil and is, in fact, in talks with more than nine oil companies looking to farm into the Block.

During a recent investor update, Eco Chief Executive Officer (CEO) Gil Holzman expressed hope that the farm-in process could be completed in 2024, with the companies drill ready by the end of the year and for a well to be spud in the next 12 to 18 months.

“We have an active farm-down process. We have more than nine companies at the moment, that we’re discussing with. We are planning to finalise this process, hopefully in the next couple of months.
“Depends on the level of interest, depends on the potential commercial terms we can achieve. That will open the door for the next well in Guyana, targeting light oil,” Holzman explained during the update.
According to the executive, his Canada-based company is the full owner of the block and further, is already in receipt of approvals from the Environmental Protection Agency (EPA) to drill. He even listed prospective locations they are looking at to spud wells.

Eco Chief Executive Officer (CEO) Gil Holzman 

“The Orinduik Block in Guyana. We are the operator. We currently hold 100 per cent of the Block under two entities. The 60 per cent entity, which we bought from Tullow Oil that went out of exploration and decided simply to sell us the entity, in return for future proceeds upon discovery and production.

“So, we’re the operator. So that gives us a lot of running room for a farm-out, in terms of what we can actually offer to a new entrant in terms of working interest and in terms of future collaboration,” he said.
Holzman explained that Eco was hopeful of bringing on board a farm-in partner that can assist them with drilling at least one well. As part of his pitch for such an investment, Holzman noted that they are targeting potential sweet spots for light oil, including those located in Orinduik but close to the big discoveries in the neighbouring Stabroek Block.

“We have a drill-ready block. We drilled back in 2019, along with Tullow. We drilled two discoveries, somewhat heavy oil. Still, it can be developed and produced by the right partner. So that’s part of the offering we offer as a farm-out.
“The block comes with two discoveries that might be of interest to a potential big company that would like to develop it. But in any case, we are targeting the sweet spots of the light oil, on the south-east corners of the block, very close by to the big discoveries made on Stabroek.”

Viable quantities

Meanwhile, Eco explained in its Management’s Discussion and Analysis that the company was currently engaged in the exploration and development of the licences in order to assess whether commercially-viable quantities of oil and gas are present. Additionally, they are looking to determine if additional resources would need to be allocated to these licences.

“The company has completed the minimum exploration work required to date for each of its material licences. The company has no revenue-producing operations and continues to manage its costs, focusing on its higher potential licences as described above.

“It may seek funding in the capital markets and may seek to pursue additional joint venture and farm-in opportunities with other suitable companies having access to capital, in order to meet its exploratory commitments and development strategy,” they further said in the document.
While the company noted that it has been able to successfully raise funds so far, there is no assurance that adequate funding will be available in the future, or available under terms favourable to the company.

The Orinduik oil block is just a few kilometres from ExxonMobil’s discoveries in the Liza and Payara fields in the oil-rich Stabroek Block. Back in 2019, when British company Tullow still had control of Orinduik, two exploration wells – Jethro-1 and Joe-1 – were drilled on the Orinduik licence. However, they did not yield commercial oil discoveries.

Eco would end up acquiring 60 per cent of Tullow’s interest in the Orinduik Block via a deal last year after the British company decided to exit the block, making the Canadian company the leading operator on the Orinduik licence with a 75 per cent interest. The remaining 25 per cent working interest is shared by a joint venture between Qatar Petroleum and Total E&P Guyana BV (TOQAP).