Even though Eco Atlantic is riding high on the glory of finding oil in the Jethro-1 well of the Orinduik Block, it is likely that the company would not be in Guyana for the long haul. This is according to the latest report of Pareto Securities, a Norwegian investment bank with a leading position in the Nordic capital markets and a strong international presence within the oil, offshore, shipping and natural resources sectors.
Specifically, Pareto said that Eco is likely to sell the company at some stage to avoid the long and more capital-intensive development phase of the block. The investment bank said that this is often better suited for larger oil companies while noting that Eco’s decision is perhaps, a prudent strategy to maximize shareholder value.
Further to this, Pareto said that management at Eco is expected to be fully funded for five additional exploration/appraisal wells after the drilling of its second well, called Joe, is completed.
The financial institution noted that Eco has a cash position of USD$35m as of June 10, 2019. It also stated that the Orinduik partners, who are led by Tullow, are yet to announce drilling plans for 2020 and beyond which making future estimates of expenditures highly uncertain.
If there is a potential need for more external capital, the bank said that Eco Atlantic is likely to benefit from its shareholder base. Africa Oil Corp. is the majority shareholder in Eco with 19 percent of the outstanding shares and is backed by the Lundin Group. In addition, key members of the board of directors and management team have substantial holdings totaling 14 percent. The bank said that this is a major positive for all shareholders going forward.