Royalty modelI know Gil's been at this for over a decade. To his credit he called Guyana and Namibia long before most. In looking at how Tullow formulated their deal I do have respect for the Royalty they included (and nothing else as Tullow is a dumpster fire)
I wouldn't be upset if ECO forewent a couple million if it secured a royalty between .5 - 2% in a farm-down.
my rationale is ECO will unlikely ever get to first oil on these prospects. While not impossible, that never seemed Gil's intent.
what is interesting is the future value of a royalty stream is monetizable. If it isn't monetized immediately it could become a royalty trust.
If Eco, assuming massive discoveries couldn't afford a future FPSO which would you prefer:
Farm down for $10 million then sale to limited players in the game.
Farm down for $7.5 million with a 1% royalty, then either a sale to limited players in the game with or without a future royalty stream.
just food for thought