Total signs option agreement with Eco Atlantic on the Orinduik block, offshore Guyana

TORONTO -- Eco (Atlantic) Oil & Gas Ltd. has announced that its subsidiary, Eco Atlantic (Guyana) Inc., has entered into an option agreement on its Orinduik block, offshore Guyana, with Total E&P Activités Pétrolières, a wholly-owned subsidiary of Total SA.

The Option Agreement provides Total with an option to acquire a 25% Working Interest in the Orinduik block from Eco Guyana (the option). Eco Guyana currently holds a 40% Working Interest in Orinduik, and Tullow, the Operator, holds the remaining 60%. The Orinduik block directly offsets a line of discovery wells recently drilled by Exxon in its Stabroek block in the Guyana-Suriname basin, with Exxon estimating between 2.25 and 2.75 Bbbl of recoverable oil.

Pursuant to the option agreement, Total will make an immediate payment of $1 million for the option (the option fee), at its sole discretion, to farm-in to the Orinduik block for an additional payment in cash of $12.5 million to earn the 25% Working Interest. The exercise of the option must be made within 120 days of completion of processing of the 3D seismic. The survey acquisition was completed on Sept. 5, 2017 (The Seismic Data Report) and processing is expected to take two to three months. The Option Fee is repayable in the unlikely event that the Seismic Data Report is not provided to Total by June 1, 2019.

Following exercise by Total of the option and once the transaction is completed and has received all regulatory approvals, including Government of Guyana approval, the Block Working Interests will be as follows:

Tullow – 60% (Operator)
Total – 25%
Eco Guyana – 15%

In the event that the option is exercised, each party will pay its pro-rata working interest from that date forward. With exploratory wells offshore Guyana expected to cost circa $35 million, Eco's participating interest is anticipated to be approximately $5.25 million/well. It is therefore projected that this transaction, if fully executed, will thus provide adequate funding to meet Eco’s share of the costs to drill at least two wells on the Orinduik block as well as recover the costs of the expanded 3D seismic survey.