Eco Atlantic shares fall after heavy crude discovery
Shares in oil and gas explorer Eco Atlantic fell over seven per cent today after the company confirmed it was evaluating the commercial prospects of its major oil discovery off Guyana.
Read more: Tullow Oil shares plummet as Ghana fields run into problems
The figures
Despite the shareholder reaction, Eco was bullish in its first half results with CA$30.7m (£17.9m) in cash at the end of September, meaning it is “well funded” to continue with developing Guyana’s Orinduik block.
Revenue was up 51 per cent to CA$134,415. However, this was entirely derived from interest income, as Eco does not currently hold any producing assets.
The Canada-based company also posted a net loss of CA$24.4m for the six months to September 30 from a loss of just CA$3.0 million the year prior.
Why it’s interesting
During the half, Eco announced oil discoveries at both the Joe and Jethro wells on Orinduik, of which it owns 15 per cent. Tullow Oil owns 60 per cent and France’s Total the remainder.
Last week shares in Tullow fell 27 per cent as the company revealed that samples from the Guyanese wells found that the oils recovered from both wells are heavy crudes, with high sulphur content.
Heavy crudes are often priced at a discount due to the extra refining costs that are required to treat them.
Read more: Shares rise as Tullow Oil sees great start to Guyana drilling
Eco said that it had engaged a third party to evaluate the production and commercialisation of the fields, with an update expected in January 2020.
What Eco said
Gil Holzman, president and chief executive officer of Eco Atlantic, commented:
“We ended the first half of our financial year with a very strong balance sheet. After drilling our first two wells in Guyana we now have CA$27.9 of cash and cash equivalents. These funds will be used to continue the evaluation of our two Guyana oil discoveries and to drill additional exploration and potentially appraisal wells on the block in 2020.
“We recognise the market reaction to our last announcement on the oil quality discovered at Jethro and Joe and we are grateful for the continued support of our shareholders. This continues to be an exciting time for the ompany, as the Orinduik block offers many promising prospects.”
Main image credit: Getty