Share Name Share Symbol Market Type Share ISIN Share Description
Eco (atlantic) Oil & Gas Ltd LSE:ECO London Ordinary Share CA27887W1005 COM SHS NPV (DI)
  Price Change % Change Share Price Shares Traded Last Trade
  -0.75 -3.49% 20.75 242,992 09:00:07
Bid Price Offer Price High Price Low Price Open Price
20.50 21.00 21.50 20.75 21.50
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Oil & Gas Producers 16.95 4.17 3.00 6.9 38
Last Trade Time Trade Type Trade Size Trade Price Currency
16:24:19 O 5,787 20.90 GBX

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12/7/202002:58Eco (Atlantic) Oil & Gas - Guyana and Namibia372
08/7/202019:37ECO Atlantic--Next door to Exxon Offshore Guyana7,392
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27/1/201113:10THE ECONOMY-
26/10/200910:06ecosecurities - carbon trading238

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Eco (atlantic) Oil & Gas Daily Update: Eco (atlantic) Oil & Gas Ltd is listed in the Oil & Gas Producers sector of the London Stock Exchange with ticker ECO. The last closing price for Eco (atlantic) Oil & Gas was 21.50p.
Eco (atlantic) Oil & Gas Ltd has a 4 week average price of 20.65p and a 12 week average price of 16.25p.
The 1 year high share price is 217.50p while the 1 year low share price is currently 13p.
There are currently 184,697,723 shares in issue and the average daily traded volume is 1,870,658 shares. The market capitalisation of Eco (atlantic) Oil & Gas Ltd is £38,324,777.52.
maccamcd: STRONG BUY: TP 110p from share price Angel Transformational resource potentialThe past 18 months has seen Eco (Atlantic) Oil & Gas ("Eco" or "the Company") emerge as a hugely successful explorer in frontier regions. Two large discoveries offshore Guyana made in 2019 will be followed by two further wells planned for next year, targeting the prolific Cretaceous formation at its flagship Orinduik Block. Drilling offshore Namibia is also due to accelerate this year, which we believe could directly de-risk the Company's considerable acreage position in the region. We therefore initiate coverage with a STRONG BUY rating, setting a 110p/share Target Price.Orinduik Block misunderstood by the marketIn our view, the sell down of Eco's stock late last year was unwarranted and presents a significant opportunity for investors to take a position in the Company at a deep discount to NAV. Whilst analysis confirmed the Tertiary formation at Orinduik contains heavy, sour crude; the reservoir is high-quality, over-pressured and at a high well head temperature, all of which will help with the mobility of the oil. 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. 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.Cretaceous drilling will drive Eco's valuation next yearHowever more importantly in our view, is the transformational potential of the Cretaceous formation which has yielded multi-billion-barrel light sweet crude in adjacent fields and will be targeted by Eco and its partners at Orinduik next year. Given the substantially de-risked nature of the play, we would expect another resurgence in the Company's valuation from current subdued levels.Offshore Namibia has emerged as one of the hottest regionsWhilst offshore Namibia has had a somewhat chequered drilling history, recent confirmation of a working petroleum system and the region's underexplored status, has led 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, and we would expect further interest in Eco's enviable portfolio of licences in a success case.We initiate coverage with a STRONG BUY rating and 110p/share TPIn our view, Eco's shares offer investors a compelling entry point into a technically adept explorer, with a transformational asset base. 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, we firmly place Eco within our STRONG BUY list, setting a 110p/share price target.
pro_s2009: No chap...I was there posting at 12p, 10p, 8p.........on CHAR :) Trolling ? No....calling to to fall down...yes. For ECO, who cares about the CPR..........its just a CPR......means nothing until you actually hit oil with the drill. They had a CPR before and the share price was 25p for a long time......... People care about drilling.......if as suspected the best TLW offer is maybe a drill late Q4 2020..... ECO share price will plummet down as nobody wants to hold an Oil Exploration company thats not going to be drilling any time soon. If TLW confirm no drilling in 2020 and options for know exactly what will happen to the ECO share price. With the CPR there is a hell of a lot of people looking to sell the you might get a spike up and then it will be sold into hard. Watch the selling pile on in the days after that CPR is released........First Out Better Price. Last ones to sell, lower price.
costax1654x: Carapa results soon!If duster TLW will reconsider specially after the heavy oil results!It will destroy ECO share price!Anyway 90 mil mcap for a non producer is overvalued big time!
2000tober: Tullow’s last chance saloon Discouraging Guyanese crude appraisal ramps up the pressure on year-ending drill prospect The final drilling target of the year for Anglo-Irish independent Tullow has become more pivotal following the company’s revelation that crude from its offshore Guyana discoveries is heavier and more sulphurous than expected. Tullow’s share price had been elevated in recent months. Hopes were high that the company’s twin offshore Guyana discoveries might replicate the crude quality of ExxonMobil’s neighbouring Stabroek block. But laboratory analysis of crude taken from the Jethro and Joe discoveries, in the Orinduik block, revealed crude of 12° API gravity and c.5pc sulphur—in contrast to the lighter 32.1° API gravity and 0.5pc sulphur content of ExxonMobil’s Liza discovery—risking the commerciality of both prospects. The disclosure of the crude quality swiftly sank Tullow’s share price. On 13 November, the value slumped by 27.3pc before finally settling at 149.6p, the largest drop in the firm’s history. Canadian independent Eco Atlantic, a partner in the Orinduik block with a 15pc stake, also suffered a sizeable loss as its share price tumbled by 48pc. The final Guyanese drilling target of the year is now more crucial than ever for the company’s exploration campaign and the near-term recovery of the share price. The Carapa well currently being drilled is the first in the Kanuku block, split between operator Repsol of Spain (37.5pc) and partners Total (25pc) and Tullow (37.5pc), and the first to test the Cretaceous play—both Jethro and Joe were found in the Tertiary. Tullow says around 50pc of prospective resources across both the Kanuku and Orinduik blocks are located within the Cretaceous, indicating that the well is likely the most important of the year. A report from US investment bank JP Morgan highlighted that the oil quality is unlikely to be an issue given the light oil discovered in the Cretaceous at Liza. The rig at Carapa began operations one month behind schedule, but the partners aim to conclude operations before the start of next year. Tipping the balance The offshore Guyana discoveries had been offsetting delays from Tullow’s African portfolio. Production from Ghana was downgraded repeatedly throughout this year as gross production guidance from the TEN field fell by 25pc and the Jubilee field by 7pc. Tullow was forced to reduce its total full-year production forecast from 89,000-93,000bl/d to c.87,000bl/d. Project schedules in Uganda and Kenya also slipped, with the likelihood of both now reaching final investment decision (FID) in 2020. A tax disagreement with the Uganda government on the Lake Albert project caused Tullow’s farm-down agreement with partners Total and China’s Cnooc to be terminated following the expiry of sale and purchase agreements. Tullow will now look to initiate new sales process to reduce its 33pc stake in the project. Combined, the Ugandan project assets total around 1.7bn bl in estimated resources and are expected to reach gross production of 230,000bl/d oe. Total will operate the Tilenga section of the project on the northern shore of Lake Albert while Cnooc will operate the southern stretch at Kingfisher. Exports will then be pumped by pipeline to the port of Tanga. In Kenya, Tullow’s project had been earmarked to reach FID in the first half of 2019. But delays to the schedule have been affected by government requests for additional dialogue with local communities. The firm, along with its JV partners, is now advancing negotiations with the government on issues such as water, pipeline finance and land acquisitions and plans to reach FID in the second half of 2020. The project holds 560mn bl oe in estimated resources and is targeting 60,000-80,000bl/d in initial production, which will then be piped to the port town of Lamu. More positively for Kenya, in August President Uhuru Kenyatta announced the country’s first ever export cargo of oil from the early oil pilot scheme. Around 240,000bl was shipped from the port of Mombasa
pro_s2009: No problem. If the author of that article is correct, and there is no reason to doubt it, then I would expect a negative reaction on TLW and ECO when it becomes official. I do hope Carapa comes in good, it will offer some respite to ECO and TLW and allow a bit of confidence and sentiment to come back, the risk is of course should Carapa fail and its about only a 1 in 4 chance it will be a success based on the pre-drill CoS, then there will be a massive sell off, which may see two thirds of the current share price ripped off in a sell down. Carapa is not in the ECO license, so although it would be positive there is a long wait to further drilling - which means many will sell the good Carapa news - so I would see perhaps 80p for ECO on Carapa being good. Against that Carapa failure with no further drilling for a long time would see quite a big sell off and big share price fall imo. Thats the risk/reward ratio here currently imv. If Carapa comes in good, I will look to buy in around the tax year end sell off in March next year at around 70p/80p levels.
maccamcd: Hannam and partners updateEco Atlantic Oil and Gas Guyana: demystifying the heavy sour implications Tertiary play: still a good chance that the Jethro discovery is commercial Given the sharp share price sell off seen of the Guyana focused E&P companies last week, following the announcement that the Jethro discovery contained heavy and sour crude, we believe it is useful to provide some context around this. Our view is that Jethro still has a good chance of being a commercial discovery as there are positive factors such as the temperature of the crude, the over-pressured, high-quality reservoir sands and the crude viscosity that offset the fact it is heavy and sour. Eco 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. This is supported by the commentary from Hess on its Tertiary Hammerhead discovery, which is heavier than the Cretaceous discoveries on the Stabroek block. Cretaceous play: low probability of heavy/high sulphur crude on Orinduik We do not believe that the Tertiary results (shallower targets) have any significant bearing on the Cretaceous plays (deeper targets with 3bnboe of unrisked prospective resource) on the Orinduik block for a variety of reasons including: the likelihood of a different source rock, the deeper burial (the oil should be lighter) and the fact that the multitude of Cretaceous discoveries made by Exxon/Hess on the adjacent block are much lighter and sweeter than Joe. On the adjacent Kanuku block (Repsol, Tullow, Total) the Carapa well in the licence, is currently drilling a Cretaceous play. Success here would further derisk some of the large Cretaceous prospects on Orinduik. The well started at the end of October, with results expected before the year-end. Following this Eco is expected to release an update CPR in January 2020. Hammerhead read across: commercial discovery that extends onto Eco's block The Hammerhead discovery, like Jethro and Joe is also Tertiary in age. It is heavier than the Cretaceous discoveries and reportedly saw positive flow tests. Hess commented recently that they drilled three wells on the discovery and were unlikely to have done this if they didn't believe it was commercial. Hess and Exxon have already decided on the first 3 FPSOs on its Stabroek block and Hess commented that Hammerhead is highly likely to be the 4th or 5th FPSO development to be sanctioned. Valuation update: we continue to see >300% upside to our risked NAV We have cut our risked NAV to 216p/sh from 295p/sh as we have taken a 30% haircut to the NPV/bbl of the Tertiary discoveries and prospects and also decreased the chance of commerciality. Our NAV is based on a flat long-term oil price of US$70/bbl and a 12% discount rate. Eco remains well funded with a current cash position of US$21mm. The unrisked value of all the Guyana prospects and discoveries is >£15/sh. Eco also continues to advance exploration and value creation on its four Namibian offshore blocks, where it is seeing increased inbound interest and drilling activity in the region. A further update for drilling plans for next year on the Orinduik block will be made in January 2020.Tertiary oil play in Guyana Given the sharp share price sell off seen of the Guyana focused E&P companies last week, following the announcement that the Jethro discovery contained heavy and sour crude, we believe it is useful to provide some context around this. Our view is that Jethro has a good chance of being a commercial discovery still as there are positive factors such as the temperature of the crude, the over-pressured, high-quality reservoir sands and the crude viscosity that offset the fact it is heavy and sour. This is supported by the commentary from Hess on its Tertiary Hammerhead discovery. Secondly, we do not believe that this result has any significant bearing on the Cretaceous plays on the Orinduik block (3bnboe of gross unrisked prospective resources) for a variety of reasons including: the likelihood of a different source rock, the deeper burial meaning the oil should be lighter and the fact that the multitude of Cretaceous discoveries made by Exxon/Hess on the adjacent block are much lighter and sweeter than Joe. We are taking a closer look at the factors that affect the commerciality of heavy and high sulphur oil. Heavy oil contains less of the light ends (e.g. gasoline and diesel) and more of the heavier compounds (e.g. fuel oil and bitumen). High sulphur crude is corrosive and needs to have the sulphur removed. Pricing Heavy, sour crude trades at a discount given less favourable yields of the more desirable light products. However, recently there has been a reduction in the discount for heavy sour crude as production has declined in the key producing regions of Mexico (e.g. Maya crude) and Venezuela (e.g. Boscan). Also, there has been dramatic growth in lighter crude production from the US, following the shale boom, where many of the refineries were geared to take in heavier crudes. There are a number of refineries that aren't designed to take lighter crude and so there is strong demand for the likes of Maya crude (22 o API and 3.3% sulphur). Therefore, there have been times this year that Maya crude has traded at a premium to US WTI crude (40 o API and 0.2% sulphur).
maccamcd: UPDATED research from Hannam & partners just out Eco Atlantic Oil and Gas Upping our discovered reserve and undiscovered resource estimates for recent success Increasing our risked NAV to 295p/sh: 120% upside to the current share price Despite significant exploration success, Eco’s share price has come down recently on lack of news flow, in our view. Following the recent updates on Guyana, we are increasing our risked NAV to 295p/sh from 216p/sh, as a result of increases to our existing discovered resource estimates, as well as including new exploration prospects, leading to >100% upside to our risked NAV. We are increasing our discovered resource estimates to 69mmboe net to Eco from 56mmboe, based on further data on Hammerhead and Jethro. We are maintaining our risking and US$5.2/boe estimate, which results in a risked value of 85p/sh up from 68p/sh for the discoveries. We have added 5 new Tertiary aged prospects, which we estimate to have 1.1bnboe of gross unrisked prospective resource, based off our evaluation of their areal extents. These prospects are worth 61p/sh risked or >£3.50/sh unrisked. We expect Eco to release a new CPR including discoveries and new prospects in Q1’20. Increases to discovered resource at Hammerhead and Jethro Hammerhead is a major discovery made by Exxon/Hess on the Stabroek Block, which extends onto the Orinduik Block. Eco believes ~10% of Hammerhead could lie on its block and Hammerhead could be 400-800mmboe gross. Eco’s last CPR (prior to the appraisal wells) only gave credit for 2mmboe net to Eco and we have increased this to 9mmboe based on 600mmboe gross, with 10% on the Orinduik block following the positive appraisal results reported by Hess/Exxon. This gives a risked value of 12p/sh or 19p/sh unrisked. On Jethro, we are upping the estimated recoverable resource estimate to 250mmboe from 215mmboe to reflect the results exceeding the partners’ pre-drill expectations. This gives a risked value of 46p/sh or 81p/sh unrisked. The pre-drill estimate for Jethro was 215mmboe in the CPR on a P50 basis or 340mmbbl on a P10 basis. In the P10 case, using an NPV of US$5/bbl, the discovery is worth >US$250mm net to Eco on an unrisked basis. New Tertiary exploration prospects, derisked by Jethro and Joe Eco has recently released a new exploration map, which contains a large number of new prospects that weren’t in the original CPR published in March 2019. At that time the Tertiary play was only just starting to be understood, following the Hammerhead discovery, so there were only a few prospects that were included. The new map contains 8 new prospects of which 7 are Tertiary – we have included the largest 5 of these in our valuation. The Tertiary play has been heavily de-risked by the Hammerhead, Jethro and Joe discoveries. There are now 20 identified exploration prospects on the block, some of which are very low risk such as Jimmy and Jethro Extension, as they are potentially part of the existing discoveries. However, the other Tertiary prospects on the block are likely to have a high chance of success also, given the clear seismic definition and the calibration from the past discoveries. Appraisal and further exploration to come: unrisked value of £17/sh Our risked NAV is 295p/sh, based on a flat long-term oil price of US$70/bbl and a 12% discount rate, on the basis of which we calculate an average NPV of US$5.2/boe for the resources in Guyana. The unrisked value of all the Guyana prospects and discoveries is around £17/sh. Eco also continues to advance exploration and value creation on its four Namibian offshore blocks, where it is seeing increased inbound interest and drilling activity in the region. Eco is a lean organisation with a highly experienced management team, has a proven track record of exercising farm-outs, is fully funded for its current planned activity and beyond, has an early mover advantage in its blocks, and we think management would sell for the right price.
maccamcd: New Higher PT from Pareto this morning 200pSurfing on the Guyana wave Performance Source: Factset Unrisked prospective resources at Orinduik (net) Source: Pareto, Eco Atlantic Analysts Eco Atlantic's transformational Jethro oil discovery had a pre-drill estimate of 220 mill boe gross and considerably derisks the Tertiary fairway, which holds 600 mill boe of additional upside potential. The partners have already commenced drilling of the next prospect, Joe-1, and we estimate a value potential of GBp 44/share if successful. In addition, deeper targets hold 3.2bn boe of gross unrisked prospective resources that have a lower chance of success but if successful on our estimates provides >5x upside to the current share price. With funding secured for another five wells, we believe Eco Atlantic is well positioned to maximise the value of its position in the world's hottest exploration region that at some point could lead to a sale of the company. BUY reiterated – TP up to GBp 200 (170) Jethro discovery derisks 600 mill boe potential along the Tertiary fairway Eco Atlantic's first well on the Orinduik block (15% WI) resulted in the Jethro discovery in mid-August, which had a pre-drill estimate of 220 mill boe gross according to the company. This led to a ~15% upwards revision of the unrisked resources estimate of the block and significantly derisked the remaining five prospects on the Tertiary fairway, where the Joe prospect commenced drilling on 27 August. The prospect has an unrisked resource estimate of 150 mill boe gross. Results from the well are expected in September and we estimate a value potential of GBp 44/share in case of success (~30% upside to the current share price). If the partners are successful in proving up the full potential of the Tertiary fairway, we estimate that our valuation of Eco Atlantic would increase to about GBp 240/share before attaching any value on the deeper potential at the block. Adjacent well could help derisk 3bn boe deeper potential by YE'19e The rest of the Orinduik partners (excl. Eco Atlantic) also hold interests in the block to the south, where the Carapa-1 well is expected to be drilled by YE'19e. If successful, this would help derisk the shallow water Cretaceous fairway on Eco Atlantic's acreage that is yet to be tested. This section is estimated to hold about half of the 3.2bn boe of gross unrisked Cretaceous potential while the remaining future upside is in deeper waters where ExxonMobil has been highly successful on the adjacent Stabroek block (13 discoveries with a 90% success rate currently estimated at >6bn bbl). One of its Tertiary plays; Hammerhead, was discovered a year ago and is believed to extend into the Orinduik block. While several milestones remain and the uncertainty is high, we estimate >5x upside potential to the current share price if the deeper potential is proven up by future drilling success. We see downside to about GBp 50-70/share if all future exploration wells are unsuccessful. Attractive acquisition candidate – BUY/TP up to GBp 200 (170) We estimates Eco Atlantic's NAV at GBp 202/share (Brent USD 65/bbl LT), which is up from previously GBp 170/share driven by the recent strong drilling results. As such, we reiterate our BUY recommendation and increase our TP to GBp 200. Eco Atlantic had USD 35m in cash and no debt as of 10 June after raising USD 17m of new equity in Apr'19. Management guides that this can fund the company for at least five additional wells after Joe-1, implying that Eco Atlantic likely is funded for its near to medium term activities. With its recent discovery and exposure to arguably the hottest exploration region in the world, we think Eco Atlantic could be an attractive acquisition target going forward. We view other large oil companies already present in the region as the most likely potential buyers, which among others includes Eco Atlantic's partners Total and Qatar Petroleum that currently have relatively low equity interests in the Orinduik block. The main risks to our positive view on Eco Atlantic are disappointing drilling results, lower oil prices and/or unforeseen negative political events in Guyana.
manicat: Eco Atlantic Oil & Gas Ltd (LON:ECO) (CVE:EOG) has revealed the impressive findings of a new resource assessment for the Orinduik Block, offshore Guyana, ahead of exploration drilling later this year. Consultant Gustavson Associates has estimated some 3.98bn barrels in prospective resources across 15 exploration areas, which for Eco’s 15% stake in Orinduik, equates to 597.3mln barrels net to the AIM-quoted firm. Gustavson viewed a ‘low case’ estimate of 2.01bn barrels of prospective resources, and a ‘high case’ of 7.2bn - which net to Eco, amounted to 302mln to 1.08bn barrels. READ: Eco Atlantic Oil & Gas boss “very excited” as exploration drilling nears The new assessment follows the completion of the 3D processing and an additional six months of interpretation work. It included processed data from a 2,550 square kilometre 3D seismic programme, and, insights gleaned from regional discoveries (such as Hammerhead) made by Exxon. "Eco is pleased with the progress made in defining the prospectivity on Orinduik,” said Colin Kinley, Eco chief operating officer. “As the regional play continues to develop, and more discoveries have been made, particularly in the Tertiary play, as was proven by Exxon's Hammerhead 1 discovery, this has allowed us to build upon our model.” Well will target the Jethro prospect Kinley highlighted that the first exploration well will target the Jethro prospect which was estimated at 214.5mln barrels by Gustavson, with a 43.2% chance of success. He added: The partners are in the process of approving a second well and we believe the risking will be in the same range as for Jethro. “We hope to confirm drilling plans for well number two in the near future to take advantage of the economics of our rig on the block.” “We have confidence in our and our partners' work to date, as we continue to work with the industry leading teams at Tullow, who is the operator, and Total, who is a fully engaged partner. “At this point, we are looking to drill strategic lower risk targets. “Assuming positive results, we aim to move quickly to production planning and optimum economics for our partnership and the people of Guyana." Luxury problems to have In a note to clients, analysts at SPAngel commented: “In what is likely to be the final resources statement before the start of the drilling campaign on the Orinduik block, at a gross predrill estimate of 3,981.9mm boe, this report quantifies and confirms the potential of the licence area.” They added: “What is interesting to note is that very little is being given away by the Hammerhead discovery already in the block, which given the abundance of high-quality seismic significant improves exploration confidence, even if exploration risks remain.” The analysts concluded: “Whatever the outcome, that Hammerhead has been observed as coming on to the licence already means that the Company has more than exploration value, but the question is how much. “These are luxury problems to have, and ones which we believe will result in value creation for the Company and its shareholders.” In afternoon trading, shares in Eco Atlantic were 2.5% higher at 91.75p. -- Adds analyst comment, share price --
maccamcd: Explorers don't get any more exciting than Eco Atlantic - which is why I have been buyingBy Gary Newman | Sunday 30 June 201930SharesDisclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.Private investors seem to love the boom or bust scenario that applies to many of the exploration drills for oil and gas, but is it really worth taking the risk on these types of plays?In the majority of cases I would say not and I tend to avoid them these days – gone are the times where every drill used to see big share price rises for the companies involved, as a matter of course – as in the event of failure the share price tends to crash badly.Generally the odds are not in your favour as many of these drills have a low chance-of-success, are in regions with little or no existing infrastructure to bring any discovery to market for years, and when smaller companies are involved, often they will only have the funds for one drill, so it is really all or nothing for them.The upside is often the chance of making a large discovery which could be worth many multiples of the current share price.One company which I seem to be seeing mentioned a lot recently is Eco Atlantic (ECO) which is about to embark on its first drill in offshore Guyana, where it has a 15% working interest and is partnered by operator Tullow Oil (TLW) with 60%, and Total with the remaining 25%.It's Orinduik block has best estimate prospective resources of nearly 600mmboe net to Eco and it is about to embark on two consectuive drills at its Jethro Lobe and Joe prospects, with the former exploring a cretaceous target, as well as the upper and lower tertiary turbidites.But what makes these drills any different to any of the others, as others companies have also been in a position where they are targeting resources of this sort of size.Geographical location is never any guarantee of success just because you happen to be located near to large existing finds, but in this case I would argue that it plays a bigger factor than normal as it is right on the edge of the area where ExxonMobil has already had great success and has discovered over 5.5 billion barrels of oil so far across the Stabroek area, with its Hammerhead block extending into Orinduik, and Eco's block also being up-dip of these discoveries. Hammerhead found 197ft of oil bearing sandstones.Exxon has already sanctioned the development of the Liza prospect, which is expected to produce up to 220,000bopd, and is embarking on a 30 well programme. It's rig is currently testing the Longtail-1 discovery, with results due soon – if they are good and land during the Jethro drill it certainly won't do any harm - and will then move on to drill Hammerhead-3.Exxon has so far achieved a successful strike ratio in excess of 90%, and although that doesn't guarantee that Eco will also be successful, it certainly bodes well and is why the Eco wells have a COS in excess of 40% for each well, which is about as good as it gets for an exploration drill.Eco isn't totally reliant on one drill either, as it is funded for these initial two wells plus up to a further six additional wells, so that certainly reduces the risk of a complete share price crash should the first drill prove to be a failure.With everything else going on in the area, I would expect that in the event of success we would see a rapid move towards a situation where any finds are put into production, and the economics for the area are good – the neighbouring Liza field is expected to produce at $35/barrel for phase 1, dropping to $25 per barrel for phase 2, which makes it ones of the lowest cost major offshore developments in the world.Given the size of its partners, funding shouldn't be a problem for any development, and I would expect a deal to be done to help Eco to finance its share, should that stage be reached.There is of course still plenty of risk involved and if the first drill fails I would expect to see the share price below the current level of around 70p, but also think it would quickly find some report with the second drill straight afterwards.You could also argue that the company isn't particularly cheap at £127 million market cap, given it is purely an explorer, but the amount of interest generated should it make a big find – and with likely a steady stream of further news to come – will make that look cheap, I believe (similar questions were always raised about the valuation of another favourite of mine, Hurricane Energy, but now that is producing and valued at nearly £1.05 billion).So, if ever you are going to take a bit of a gamble on shares in an exploration drill, then I believe that this is the one to buy in for – I have done myself and it will be the first exploration drill for a small company that I've held shares in for a long time, as usually I don't see the risk as being worthwhile.It also seems like a good level to buy at as the share price has dropped back a fair bit recently and is well below the level that funds were last raised at a few months back. It would seem that the Canadians would agree, as the shares are dual listed on the TSX and are currently trading there at the equivalent of 86p, and it is unusual to see such a big discrepancy between that and the London price.If this drill attracts the level of interest that I am expecting, then there may well be the chance to derisk some of your holding before results come, but this is one where I will be leaving at the very least part of my investment to run and see how things pan out several drills down the line.For an exploration drill, I would rate this as about as strong a buy as you really get for that scenario, and if it is successful I can see a lot of upside from the current share price, just based on the first drill alone. Never miss a story.
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