Report on Neighbour PCL I allready posted from time to time about our neighbour PCL, where I am also invested. Hartleys, an Australian "financial service company" (check out on your own what they do => https://www.hartleys.com.au actually they are not the smallest Australian company in this business) released an updated report about PCL, which one can download here: https://www.pancon.com.au/investor-centre/broker-reports/reports/120412.pdf
The report focuses mainly on PCLs development offshore Kenya/ East-Africa, BUT they also talking about PCL's licenses offshore Namibia.
Due to the fact that PCL is neighbouring ECO directly, the chapter about Namibia counts also for ECO (from my point of view). Just exchange "PCL" with "ECO". ;-)
Some quotes for the lazy bones ;-) which I loved most so far I allready inserted "ECO" here and there:
"Chariot Oil and Gas (CHAR.LN) recently spud its 604 million barrel Tapir South well to the north of PCL’s 85% owned EL0037 permit offshore Namibia [and ECO's as well]. Whilst this is in a different basin, there are geological similarities to one of the play types on PCL’s / ECO’s permit. Any success would be hugely positive for PCL / ECO. [..] BP also recently completed a US$130m farm-in offshore Namibia in acreage to the south of PCL / ECO. Four to six wells are planned offshore Namibia over the next 12-18 months. This scenario looks very similar to East Africa two years ago where little exploration had occurred before application of modern techniques yielded stunning success. A significant increase in industry interest means that entry can only be gained through transactions and we believe it likely PCL / ECO has received several unsolicited approaches."
"Namibia has just entered its first round of drilling after a ~20 year hiatus with 4-6 wells planned over the next 12-18 months. Given global success rates are >20% using modern techniques, we would expect one of these wells to be a discovery, which would significantly re-rate all Namibian acreage. There is now very little acreage left offshore Namibia, so industry players wishing to gain exposure must deal with existing owners. We have seen several transactions over the last two years with the HRT takeover of UNX for ~US$700m as well as the recent farm-in by BHP to Serica Energy (SQZ.LN). The transaction metrics indicate look through of roughly $1m per percentage point in each block (i.e. PCL’s 85% interest has a look through valuation of ~US$85m)." (<= you may calculate on you own what that means for ECO)
"Due to the excitement surrounding the many discoveries offshore East Africa and the upcoming drilling at Mbawa in Kenya, we believe that the significance of PCL’s / ECO's Namibian acreage has been largely overlooked by the market."
By the way:
"PCL acquired its acreage position in early 2007, well ahead of a major land grab by industry that has increased the value of its permit. EL0037 is very large, covering three blocks in the Walvis Basin, and is 17,295km2 in area. Water depth ranges from 0 to 1,500m and the permit contains several different play types. As with the Kenyan blocks, there is a strong geological argument for the presence of oil as opposed to gas. The work commitments for the next two years are minimal; however, there is a chance that PCL may fast track these on the back of a farmout."
=> ECO maybe also?
"To us, Namibia presents an opportunity similar to that of East Africa prior to the resurgence in drilling 2 years ago, which led to unprecedented success. Obviously, it will be hard to duplicate an 80% success rate; however, by just keeping in line with global success rates for frontier areas using modern techniques, there is likely to be at least one discovery offshore Namibia over the next 18 months (assuming 5 wells and probability of success of 20%). This could be the Tapir South prospect, currently being drilled by Chariot, which has potential for 604 million barrels of recoverable oil. Tapir South has geological similarities to one of the play types on PCL’s / ECO's block and is located in the Namibe Basin to the north."
I think the conclusion in this paragraph counts also for the blocks of ECo, because PCL and ECO are direct beighbours.
"Note the low number of wells offshore Namibia (8 outside of the Kudu Gas Field) and the incidence of oil and gas shows. One of these was drilled on PCL’s [and also ECO's] block but deemed to be off structure. Oil shows and excellent reservoir were encountered. With the aid of modern 3D seismic and more drilling, the likelihood of commercial discoveries in the region is considered high."
=> Take a look to the table on page 10 in the report!
So far so good. Don't look at ECO's share price NOW, but try to imagine where this could be at the end of the year, when the situation offshore Namibia is heating up!
I love to holding PCL & ECO for long and strong!!
Have a good evening
read you tomorrow,
Neo