Eco (Atlantic) Oil & Gas Ltd has raised US$17 milion of new funds to cover its participation in a possible expansion to the exploration drilling campaign offshore Guyana.
It is selling 16.1 million shares to new and existing investors at a price of 80 pence per share, only a small discount to Wednesday’s closing price of 83.2 pence. In afternoon trading, shares in Eco Atlantic were only down 0.6% at 83 pence.
With the injection of cash, Eco told investors it will be able to fund its share of up to four additional exploration or development wells, perhaps indicating confidence among the joint venture partners ahead of the first phase of wells.
A two-well programme was already in the books for this year – targeting the Jethro-Lobe and Joe prospects – and Eco recently described itself as ‘fully funded’ for those wells. The Jethro-Lobe well is slated to spud in June.
It suggests as many as six wells could potentially be drilled in the Orinduik block, should the first phase of results provide sufficient encouragement.
A rapid campaign would somewhat follow the blueprint of Exxon’s neighbouring Stabroek block, where the US major has rapidly drilled and made discoveries in 12 exploration wells since 2015 (unearthing more than 5bn barrels of crude resources).
Eco last month published the findings of a third-party resource assessment, which indicated some 4bn barrels of exploration potential for its Orinduik asset.
Gil Holzman, Eco chief executive, in a statement, highlighted strong support for the new equity raise which was oversubscribed and was backed by major shareholder Africa Oil Corp.
“The level of demand is a reflection of the quality of Eco’s acreage and the potentially transformational drilling programme ahead of us starting in 2 months,” Holzman said.
“We are now very strongly funded for a potential development drilling scenario and additional exploration wells on the Orinduik block.”
Eco holds a 15% stake in Orinduik, alongside project operator Tullow Oil and Total which own 60% and 25% respectively.
In a note to clients, analysts at SP Angel said: “News that the Company has raised funds ahead of its drilling programme is a sage move as it achieves two things, it allows the Company to be able to look beyond its immediate programme and in undertaking a raise at these levels, and ahead of the first well, it has captured the excitement of what has been one of the most anticipated drilling campaigns in the last two years.”