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Eco (Atlantic) Oil & Gas Ltd V.EOG

Alternate Symbol(s):  ECAOF

Eco (Atlantic) Oil & Gas Ltd. is a Canada-based oil and gas exploration company with offshore licensed interests in Guyana, Namibia, and South Africa. The Company operates a 100% working interest in the 1,354 square kilometers (km2) Orinduik Block in Guyana. The Orinduik Block is situated in shallow to deep water (70m-1,400m), approximately 170 kilometers (km) offshore Guyana in the Suriname Guyana basin. The Company holds operatorship and an 85% working interest in four offshore petroleum licenses in the Republic of Namibia, being petroleum exploration licenses (PELs) 97 (the Cooper License); 98 (the Sharon License); 99 (the Guy License); and 100 (the Tamar License), representing a combined area of approximately 28,593 km2 in the Walvis Basin. In South Africa, the Company holds an approximately 6.25% working interest in Block 3B/4B and pending government approval of a 75% operating interest in Block 1, in the Orange Basin, totaling some 37,510km2.


TSXV:EOG - Post by User

Post by Dave4444on Sep 19, 2019 10:12am
220 Views
Post# 30143061

If you do not wish to lose money, stick to the facts.

If you do not wish to lose money, stick to the facts.
The facts are as follows, yes the block is highly prospective, but EOG only has a 15% interest and the results to date are as follows:

1)  Jethro hit oil, pre-drill it was expected to be about 220 million barrels, but it is said to be larger than expected, how much larger has not been stated.  But say 25% so maybe 300 million barrels if they are lucky and so maybe 45 million to EOG, that is all.

2)  Joe hit oil, pre-drill it was expected to be about 150 million barrels, but was smaller than anticipated, maybe only 80 million barrels and not likely to be developed on its own.  EOG's share would be around 12 million barrels.  

3) So EOG's share of currently discovered oil is in the range of about 57 million barrels in the ground, with no flow testing yet.  

4) If we assign in today's market a generous value of C$6 per barrel of oil, we get a value for the oil of 6 * 57 = C$342 million.  No peanuts, but at the same time not massive, especially if it gets discounted for the time value of money as EOG is not going to get that C$342 million any time soon.

5)  The market cap of EOG is currently sitting at C$ 460 million not counting share dilution due to options outstanding, or the likely raising of funds in the future.

6)  So basically there is at least C$120 million of speculative value contained in today's stock price and if you account for the time value of money and future dilution, likely a lot more than C$120.  So that is about 60 cents or so per share of speculation value.  

7)  So no more exploration until 2020, will the shares hold the speculation value over that time period, perhaps, perhaps not.  If oil prices rise, perhaps, if a recession occurs, perhaps not at all.  I think at best today's price is reasonable, at worst it is going to slowly drift toward the $2.00 per share level as we wait for more drilling.  BJMHO
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