Eco (Atlantic) Oil & Gas Ltd V.EOG

Anylest

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Berenberg note out also: Gearing up for the upside Strengthening the balance sheet: Eco Atlantic (Eco) has successfully raised $17m in an equity raise, raising its total cash position to $30m, enough for up to six exploration wells to be drilled on the Orinduik block offshore Guyana. We have updated our model to account for the raise. We maintain our Buy rating and price target of 110p. Why do a raise now? Management sought to secure extra funding for a potentially expanded exploration programme that may include four wells instead of the two planned originally. We note that our model currently assumes that three exploration wells will be drilled in 2019. 13th discovery on Stabroek: Exxon and its partners have announced their 13th discovery on the Stabroek block across the border from Orinduik. The latest discovery was made around the Turbot area, which will become a major production hub for the partners. A volume estimate was not provided at this stage but the latest discovery adds to a resource base estimate of over 5.5bn bbl. What is next? Eco and its partners are planning to drill their first exploration well, Jethro, in June. Prior to that, we will be watching results of a second well on the Hammerhead discovery by Exxon and its partners over the border on the Stabroek block. We note that the Hammerhead discovery extends into Orinduik and as such, not only will the results provide a read-through to Tertiary prospects on Orinduik, it will also provide a better understanding of the resource upside potential for Eco and its partners. Valuation: Our price target is set using a risked NAV, which takes account of the net cash position, net of exploration and appraisal costs (assuming three dry-holes) as well as general and administrative costs, together with risked exploration upside assigned to a three-well drilling campaign.