Eco Atlantic Oil & Gas has entered into an option agreement on its Orinduik block, offshore Guyana, with Total E&P Activités Pétrolières, a wholly owned subsidiary of French oil major Total.
Eco Atlantic said on Tuesday that the option agreement provided Total with an option to acquire a 25 percent working interest in the Orinduik Block from Eco Guyana.
Eco Guyana, a subsidiary of Eco Atlantic, currently holds a 40 working interest in Orinduik while Tullow, the operator, holds the remaining 60 percent. The Orinduik block directly offsets a line of discovery wells recently drilled by Exxon in its Stabroek block in the Guyana-Suriname Basin, with Exxon estimating between 2.25 and 2.75 billion barrels of recoverable oil.
Under the option agreement, Total will make an immediate payment of $1,000,000 for the option, at its sole discretion, to farm-in to the Orinduik Block for an additional payment in cash of $12,500,000 to earn the 25 percent working interest.
The exercise of the option must be made within 120 days of completion of processing of the 3D seismic. The survey acquisition was completed on September 5, 2017, and processing is expected to take 2-3 months. The option fee is repayable in the unlikely event that the seismic data report is not provided to Total by June 1, 2019, Eco Atlantic said.
Following the exercise of the option by Total, Eco Guyana will hold 15 percent, Total will hold 25 percent, Tullow will retain its 60 percent.
Eco Atlantic said that, if the option is exercised, each party would pay its pro-rata working interest from that date forward. With exploratory wells offshore Guyana expected to cost around $35 million, Eco’s participating interest is anticipated to be approximately $5.25 million per well.
Gil Holzman, president and CEO of Eco Atlantic, said: “We are extremely happy to complete this agreement with Total, one of the world’s largest oil companies. The deal not only validates the quality of the Orinduik block as a highly prospective license, it also validates Eco’s long-term strategy – to identify highly prospective assets in frontier basins, with favorable petroleum agreement terms, and with world-class partners.
“In the event that the option is exercised by Total, the deal proceeds will recoup all our expenses on the expanded 3D program and fund us for drilling a minimum of two wells based on current well costs. We have approximately $4 million in cash currently and once the Option is exercised Eco will be in a very strong position to be fully funded through the next few years which is expected to include several drill programs. This deal is also expected to introduce into Guyana yet another significant global player and we look forward to working with Total as well as Tullow in the years to come.”
Offshore Energy Today Staff