Eco (atlantic) Oil & Gas Share Discussion Threads

[zengas] 17/9/2018 13:36

superg

always had my eye on ECO for some time since seeing a number of respectable investor names around this but im not in as yet and may not be unless other opportunities release some significant cash for me later on.

Absolutely agree no funding needed at this time and I don't suggest that.

Westmount has a sub 3% holding in ECO (Directors O'Gorman, Corcoran, Walsh etc).

Tom O'Gorman and Walsh (Lapp Platts) persuaded John Craven from PCI to join and be CEO of Cove Energy which was formed from Lap Platts in picking up good quality opportunities (sub 9p to 240p) so those guys recognise an above average opportunity or two. They are all significant successful resource investors and Craven is an investor in Westmount.

Either way it's a bonus to see them with their experience invested in ECO via Westmount and lends credence to a standout opportunity imo that so much of the industry recognises and validated by Exxons latest close proximity success.

[superg1] 17/9/2018 12:40

Zengas

I see you are one of the ECO lurkers.

One key re fund raising is none is needed at this time as they are fine for the first drilling. I think they said something like $4 mill contribution to the Guyana first well, the water is more shallow than where Exxon are.

As we all know it's not going to stay at these prices as they approach the first well to be drilled in Guyana.

Then if Tullow hit in Namibia or others then they may get some farm in interest from majors starting to appear there like Exxon who have recently arrived

So some water to go under the bridge before we start talking further funds needed, they may have hit major oil by then in Guyana.

[zengas] 17/9/2018 11:15

Researchanalyst

Re the 3 companies you mention against ECO - there is more to their valuations to what's in your summary.

Their oil is not prospective at all. Each have booked very significant P2 with much more upside in terms of discoveries/2C and they are all producers so that's not the accurate picture in terms of debt/reasons for it (ie scaling up project developments which needed debt), cashflow, cash balances etc relative to valuations and m/caps you've shown ie BlackPearl £238m, PenGrowth £280m, Journey £40.7m.

BlackPearl Resources of which the highly successful Lundin family have a sizeable chunk.
10,100 bpd producer - 16k in 2019 (potential for future 100k)
All in breakeven of $27 cdn per bl
162 mmboe P2 + 640 mmboe 2C


Pengrowth Energy
16,000 bopd oil + 6,500 b/day gas = 22,500 boepd.
317 mmbl P2 oil + 746 Bcf P2 gas (approx 124 mmbls gas)= 440 mmboe P2.


Journey Energy
10,200 boepd (49% liquids)
60.1 mmboe 2P
$472m value unbooked inventory which has the potential to more than double the value of the company.


Finally ECO - i don't disagree with the potential and it is one of the best plays around given the nearby discoveries but the NPV is not £533m (circa $700m) which you say "even though the market is currently valuing it at a measly £58.12m (£75.32m less £17.7m cash)". It's misleading to claim "The company’s Toronto-listed peers, with materially lower prospective resources (and COS rates below 5.7%...) and staggering debt levels are sporting market caps five times that of Eco!" - That's certainly not correct when you look at all the information and that which is glaringly omitted.

Finally if ECO want to be part of the production plan, they too will need debt or equity raise to join the 3 examples you've given.
If they don't and they offload any reserves/discovered resources rather than go down the development route, i'd expect $5-$6/b.

Given the proximity to the Exxon discoveries i don't see an issue with a pre drill rise to £120m+ and which prices in just 30 mmbls but in saying the 3 examples above undervalue ECO when all the facts aren't presented is very wide of the mark especially as they have all booked P2 and some with additional considerable 2C discoveries rather than prospective oil resources as you put it notwithstanding the fact that they are producers.

[jimarilo] 17/9/2018 10:43

Indeed AC, fund raise doesn't necessarily mean at a discount

Exxon farmed in with a 30% interest in Azinam's PEL44

I would expect Exxon to increase their foot print further in Namibia as well, where that might be who knows

[acuere] 17/9/2018 10:29

This is pure speculation on my part.

If it were Exxon buying, I think it would be the Namibia blocks they are after rather than Guyana stake.

It’s only last month that Exxon took a 25% of Pel44 which is immediately South of the current drilling. Eco has large stakes of the blocks surrounding those 2. I would have thought Exxon would have approached Eco hoping for a farm in.
If I were Eco, not desperate for cash and not wanting to give away a %age too cheap a la Total/Guyana, I would decline and wait to see if any of the upcoming drills get a strike.

But then Exxon might just think it easier to take them over.

That said, I hope they don’t.

If there is a fund raising plan, it should remembered the last one was done at a premium to the share price

[maccamcd] 17/9/2018 10:06

TLW-LSE | Price 230p | Market Cap £3,184M
BUY↑ from HOLD
PRICE TARGET 270p ↑ from 250p



What's new - Namibia well drilling and Guyana outlook
Tullow is exploring again. After a long period during which balance sheet constraints limited the company's capex capacity, Tullow is showing clear signs of a return to meaningful exploration. A high impact well is underway in Namibia, but it is the recent Exxon discovery offshore Guyana, Hammerhead, which we believe could have far more significant positive implications for Tullow.
Guyana: The country is now an established oil nation following the discovery by operator Exxon (with Hess and CNOOC) of Liza and other fields offshore in the Stabroek licence. Estimated discovered resources are now c.4 bn barrels and there is believed to be further substantial running room. Liza is already being developed. The recent Hammerhead-1 well, drilled on Stabroek only 7km from Tullow's Orinduik licence, has now, in our view, materially derisked both the Orinduik (TLW, op, 60%) and Kanuku (TLW, 37.5%; Repsol, operator) licences.
Eco-Atlantic (ECO-AIM : 48.5p | NR), 15% partner on Orinduik, has recently published a CPR by Gustavson Associates covering that licence's potential. The CPR determined best case gross prospective oil resources of 2.5 billion bbls across 10 leads and prospects. Three are over 600 mmbbls in size with indicated 22% CoS.
Namibia: Cormorant-1 well is currently drilling in offshore licence PEL 37 (Tullow, operator, 35%) . The well is a proxy for four similar plays and success would naturally derisk those, with c,900 mmbbls gross potential. Cormorant spudded on 4th September and we expect it to reach TD early October. The target itself is relatively small, around gross 120 mmbbls, but the attractive fiscal terms mean that we would expect that could be standalone commercial even at $60/bbl Brent.
Guyana Valuation: Based on our understanding of the applicable Guyana tax terms (2% royalty, cost recovery, 50/50 government/contractor profit split) - which are attractive - we believe that larger potential projects could be valued at c.$9/bbl at NPV10 and $70/bbl Brent assuming similar development metrics to Liza. However, given the shallower water depth it would be reasonable to expect a lower cost structure for any Orinduik/Kanuku development. On that basis we cautiously estimate c.$10/bbl as a working resource valuation metric for Orinduik/Kanuku potential discovered resources.
Namibia valuation: In our recent note "Namibia - high hopes for oil" - we outlined various potential development scenarios. Naturally these result in a range of valuation metrics from $5-7/bbl at NPV10 and $70/bbl Brent and depending on projected development size.
Overall Tullow valuation
For the most part we steer clear of including exploration in our TPs for larger E&Ps. However, in this instance given the combination of Tullow's exploration track record, the proximity to discoveries, and the scale of the potential, we think it reasonable to include Guyana in our TP for Tullow. As a result we add a conservative estimate of the offshore Guyana value of 15p/sh (equivalent to $280m or risked 28 mmbbls net potential). We raise our TP to 270p p/sh from 250p p/sh (central value of 252 p/sh plus Guyana risked value of 15 p/sh) and we raise our rating to BUY (from HOLD).


Charlie Sharp | Analyst | Canaccord Genuity Limited (UK) | [e-mail] | 44.20.7523.4651

[maccamcd] 17/9/2018 10:06

Canaccord research on TLW value barrel in Guyana @ $10 now.
So my basic feel good factor maths are:
2.5bn resource hopes, 15% (ECO's) = 375m
375m = $3.75bn/£$ 1.31 = £2.85bn
£2.85bn / 170m shares in issue
= £16.83p per share

That would make us happy!

for ref
"Guyana Valuation: Based on our understanding of the applicable Guyana tax terms (2% royalty, cost recovery, 50/50 government/contractor profit split) - which are attractive - we believe that larger potential projects could be valued at c.$9/bbl at NPV10 and $70/bbl Brent assuming similar development metrics to Liza. However, given the shallower water depth it would be reasonable to expect a lower cost structure for any Orinduik/Kanuku development. On that basis we cautiously estimate c.$10/bbl as a working resource valuation metric for Orinduik/Kanuku potential discovered resources."

[superg1] 17/9/2018 09:19

Researchanalyst

Great post, I've not checked the detail re the others but that helps me with my head scratching here.

Surely those you list are some of the best short options on the market for those that do that.

Staggeringly unbelievable if what you post is correct and a great example of why I hate near oil juniors (except this one)

I put some of the dithering here down to the Namibia Tullow drilling where news could be due within 2 to 3 weeks.

EG Tullow duster may see some unjustified selling but folk waiting to buy on the dip, or Tullow hit which means some would buy eco but because it seems so low anyway there was no need to buy pre Tullow drill results.

Then add in the stock movement on the late reported trades. I feel sure that is someone taking stock from larger holders behind the scenes, perhaps including even some from the BOD or their options etc.

Either way this looks like a very interesting oil company.

[jimarilo] 17/9/2018 08:46

AEC were also at the conference presenting



They presented there back in March and raised $45m. Are they both about to have another raise ?

Both companies are looking at new opportunities in Namibia, AEC looking to complete a deal before C1 results as per an email reply

Gil said he hoped to announce a deal this month from his latest interview

Not sure if they are working on the same deal or separately

Time will tell as usual

[bobsworth] 17/9/2018 07:57

Great post ! What a little gem!

[maccamcd] 17/9/2018 07:32

Morning dudes
Pareto update their BUY stance. 95p to £1.20
They held an oil conference last week. Gil was obviously on good form!

"We are increasing our target price to GBp120 from GBp95, mainly
due to greater clarity on the company’s exploration prospects
offshore Guyana, with resources estimates materially higher than
our previous assumptions."

Eould be nice to see more institutions on the register. Hopefully this helps sell the story.

if anyone wants the research, PM me

[soulsauce] 16/9/2018 22:49

Excellent post.

[superg1] 16/9/2018 09:57

dav

I can't see Africa oil selling or Azinam

So I'm wondering if the late reports are someone (perhaps one of those 2) taking the shares off Ultico and Trent limited.

Those shares would amount to 12.5 mill. Just over 9 mill have been reported in the suspect late reports. So we'll have to wait and see what happens this week. Eco have a sizeable acreage where AO and Az have interest and Guyana added in a significant de-risk potential.

That's my conspiracy theory for now. Someone is taking shares off someone else, could be Total, could be Exxon, could be no one and I'm completely wrong.

Late reports are allowed under the rules when they are above the market size. Typically they get reported once the amount put into an MM has been sold in full into the market.

These double prints look like they are straight in and straight out, hence the theory.

[davwal] 15/9/2018 21:28

Maybe Total are stalking Eco, hence settling the opt in well before they needed to... clears the decks.

Edit:
Or Total moved suddenly because they got wind of another player looking to take Eco out. One thing you can be sure of is they didn’t do it from any sense of Bon Homie...

[superg1] 15/9/2018 15:42

Those late reports.

It seems to have kicked off on the day of the Exxon news.

I'm convinced they are double printed IE a trade in then a trade out. To add to that every trade be it 50k or 100k etc are even in number for all trades so surely they are double prints.

I have ignored single trade late reports and in any case they tend to have a different time stamp after hours.

So half of that amount (18 mill) comes to a smidge over 9 mill shares in late reports 31st Aug to 14th Sept.

So what is going on?

[superg1] 15/9/2018 14:52

acuere

We'll have to wait and see I could be way off the mark but it's odd.

EG

In the game of grabbing 29.9% of the shares which happens from time to time generally those after them say all or nothing. EG they will seek to find the full amount and if they are not there they will walk.

ECO don't need any via dilution so if anyone wanted a big stake the option is to approach the big holders.

I don't know if it goes on.

Just a thought, why did Total act so quickly. Could Exxon have made an approach so Total slammed the door quickly. $12.5 mill would have been seen an absolute bargain by Total as the circs changed materially.

Then with such a big hit so close to them, why would a big holder/s sell. I thought yep the trust fund cashing in while the option there but it quickly went beyond what they hold.

Something is very odd about those late reports. Someone is either late with a TR1 or something different is going on.

I'm just thought spilling I could be way out.

[acuere] 15/9/2018 11:56

Yeah you could be right.
I was thinking that the triple whammy of good news created a huge demand for the shares. The only way to meet this demand was for large holders to be approached and asked what price they’d sell some stock - hence the rapid move to 50p plus. IPO backers would be quite happy to sell some having tripled their investment and then give themselves a free carry for the rest.
The thing is, in the absence of bad news I can only see the demand increasing as the story becomes more compelling and widely known.

[superg1] 15/9/2018 11:25

If you look at the trades page you will see there are 24 late reported trades mainly ranging from 50k up to 260k.

I can't get LSE to fire up to work out buys/sells etc.

It's more of the odd large late trade action which seems to be holding this back a bit.

I'm not one for conspiracy theories but is this a stake build by someone and what we see is the stock being out through the market.

An orderly (ish) market being sorted while the trades are wound through.

A N other may have contacted large holders and made an offer for their stake.

Thoughts anyone. I have seen late reports many times on various shares from just funds putting shares out to sell into the market. This is odd and hence my conspiracy theory.

[ziblot] 14/9/2018 17:10

Found it; 9.15 on the clock, my fault altho' it still sounds to me like 60p. It is in fact, Gil speaking "We IPO'd at 16p we are now at 34p". Sorry about duff info. Onwards and upwards.

[divmad] 14/9/2018 16:50

And still only circa 170mn shares out. Gil has been very economical with dilution to us to this transformational point in the company's development.

[ziblot] 14/9/2018 16:21

Could have sworn the 60p IPO came from Gil during a broadcast?; still looking but the facts are below. As part of the AIM listing, the Company has raised £5.09 million before expenses by placing 31,781,250 new Common Shares (the “UK Placing”) with investors at a placing price of at £0.16 per share (the“Placing Price”) (the “Placing”;), giving it an estimated market capitalisation of approximately £18.92m on Admission, based on the Placing Price. On Admission, the Company will have 118,249,833 Common Shares.

[superg1] 14/9/2018 15:47

acuere

A case for some on waiting to see re late reports and any Tr1s that may come in.

It does seem like the chunks are simply going from a holder to a new buyer. Guesswork and a mystery at this time.