In Namibia, the next 18 months will see up to five exploration wells drilled on behalf of Exxon, Total, Maurel and Prom, Shell, and Galp
Eco (Atlantic) Oil & Gas’s (LON:ECO) emergence as a successful explorer in frontier regions is not reflected at all in the current share price, according to SP Angel which has initiated coverage on the stock with a ‘strong buy’ rating and a 110p target price.
The junior’s two large discoveries at Orinduik, offshore Guyana, made in 2019 will be followed by two further wells planned for next year while drilling offshore Namibia is also due to accelerate this year.
According to ‘house’ broker SP Angel, the discoveries on the Orinduik Block have been misunderstood by the market.
“Whilst analysis confirmed the Tertiary formation at Orinduik contains heavy, sour crude; the reservoir is high-quality, over-pressured and at a high wellhead temperature, all of which will help with the mobility of the oil,” its analysts said in a note to clients.
Eco has since highlighted that the crude tested to date appears not dissimilar to the commercial heavy crudes currently in production in the North Sea, Gulf of Mexico, the Campos Basin in Brazil, Venezuela and Angola, added SP Angel.
This is supported by the commentary from Hess on its Tertiary Hammerhead discovery, which is heavier than the Cretaceous discoveries on the Stabroek block, offshore Guyana, added the analysts.
The SP Angel analysts also highlighted the potential value in the Cretaceous formation which has yielded multi-billion-barrel light sweet crude in adjacent fields and will be targeted at Orinduik next year.
Offshore Namibia, meanwhile has emerged as one of the hottest regions with recent confirmation of a working petroleum system and the region’s underexplored status leading to a land grab from many of the world’s leading explorers.
The next 18 months will see up to five exploration wells drilled on behalf of Exxon, Total, Maurel and Prom, Shell, and Galp.
SP Angel expects a lot of interest in Eco’s portfolio of licences in a success case.
“The company has successfully demonstrated that it has the ability to unlock new basins, securing first-mover advantage and attracting blue-chip partners.
“With significant de-risked activity planned offshore Guyana next year, alongside an enviable portfolio of prospects offshore Namibia,” the broker said,
Eco (Atlantic) share rose 1% to 24.05p.