Oil and gas exploration and production company Eco Atlantic appears determined to make a breakthrough in its underexplored Namibian offshore assets after preliminary works in preparation for a deep dive it expects to take in the four offshore permits as early as October next year.
The junior explorer said this week in its three and six months’ results for the period ended September 30, 2019, alongside a corporate and operational update, it continues to progress its various work programs offshore Namibia in addition to monitoring keenly on the short term drilling activities in the country before updating the market on the developments and probably on how it intends to proceed with its approved exploration and drilling strategy.
However, the TSX-Venture and AIM listed firm, which on Wednesday this week announced to shareholders it had cash and cash equivalents of more than $23 million as of September 30, with nearly $21 million of it reflecting on the balance sheet, did not provide details of any changes to its earlier proposed Namibian upstream investment and work plan that has been spread to first quarter of 2021, with projected costs of more than $110 million inclusive of data interpretation and drilling of wells.
For example, a cumulative 2,000 square kilometers of 3D seismic survey is expected to be interpreted over the next three years specifically for the shallow water Cooper and Sharon licenses, both lying between 100-500 meters and also deep in water Guy offshore permit in 1,500-3,000 meters water depth.
At the 7,500-square-kilometer Tamar permit, sitting in depths of 2,500-3,000 meters of water, Eco Atlantic had previously indicated it may spend nearly $1 million to complete and interpret 250 square kilometers of 3D seismic survey in addition to evaluating a possible farm-out and relinquishment of part or the entire block, a process the company expects to be on course in the next 11 months.
Eco holds a controlling 80% working interest in Tamar after it acquired the remaining 10% of the shares of Pan Africa Oil Namibia Ltd (PAO Namibia), now a wholly owned subsidiary of the company.
Eco Atlantic, which completed a private placement that raised nearly $17 million, holds interests in the four offshore petroleum licenses totaling approximately 25,000 sq km with initial estimates putting the prospective P50 resources at 2.3 barrels of oil equivalent (bboe) both in the Walvis and Lüderitz Basins, but which have to be confirmed after a series of exploratory drilling. Eco has partnered with Namibian and South Africa-focused Azinam and State-owned National Petroleum Corporation of Namibia (NAMCOR) in the permits.
Although, Eco has been granted drilling permit for the shallow water Cooper Block, where it holds a controlling 57.5% working interest after Tullow Namibia's farm-out, the company has projected drilling of three more exploratory wells at the Sharon, Guy and Tamar permits by the first quarter of 2021.
The drilling of the exploratory wells, which Eco says is subject to identifying a target after the interpretation of 3D seismic survey, could cost a total of $102 million according to company management estimates based on current costs.
Eco, like many junior explorers eyeing a share of the underexplored offshore Namibia hydrocarbons wealth, is not being held back by the negative results of the nearly 18 offshore wells drilled as of mid this year, but rather buoyed by the existing conducive environment of a stable policy framework in Namibia.
With fiscal regimes such as a petroleum income tax of 35% and State loyalty of 5%, Namibia continues to present one of the most attractive upstream tax regimes in sub Saharan Africa especially with the elimination of capital gains tax and introduction of the off road marine diesel fuel rebate.
As Eco said previously, Namibia’s “attractive oil prospects and favorable fiscal incentives have attracted a wealth of oil majors including Tullow, Total, GALP, Shell, ONGC and ExxonMobil.”