City analysts eye significant upside offshore Guyana

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City analysts are eyeing the high potential Sapote-1 exploration well offshore Guyana which, subject to results, promises significant upside for AIM-quoted firms Eco (Atlantic) Oil & Gas Ltd and Westmount Energy Plc.


Sapote-1 was spudded recently by operator Exxon as it continues to advance projects offshore Guyana and, subject to results, it can be a timely exclamation point to Eco’s recent investments.


Eco in June acquired a 10% interest in privately-owned JHI Associates which partners Exxon in the Canje block (it has a 17.5% stake in the acreage), which hosts Sapote-1, and in Tuesday’s quarterly results statement, the company highlighted that the deal ensured it had “near-term catalysts”.


The Sapote-1 exploration well is targeting multiple prospects and the programme is expected to run for around 60 days, with results due in October. It has been described as the largest prospect to be tested in the Canje block to date.


SP Angel analyst Sam Wahab, in a note, said the Canje Block could represent another major discovery that would add to the multi-billion barrels discovered to date by Exxon.


“The majority of the discoveries offshore Guyana to date have been made in the slope environment,” Wahab said. “Canje will be the first block offshore to test prospects on the basin floor – which have the potential to contain larger accumulations of recoverable hydrocarbons.


In SP Angel’s commentary of Eco, the analyst added: “Eco will look to deliver further drilling success with its next exploration campaign on the neighbouring Orinduik block in the Basin and the follow-through potential of ExxonMobil’s recently announced multiple well pre-permitting on the Canje Block next year.”


Elsewhere, at Cenkos, analysts noted: “Sapote is an independent multi-layer prospect, which will evaluate several Upper Cretaceous targets, and is potentially the largest prospect drilled on the Canje block to date.”


Sapote spuds


In a stock market statement on Tuesday, Eco Atlantic chief executive Gil Holzman said: “With other drilling targets in the region having yielded significant discoveries, now totalling billions of barrels of oil and oil equivalent, we are excited about the potential of the Sapote-1 well and look forward to receiving the well results in due course.”


Looking ahead to the company’s own plans, for its Orinduik block, Holzman added: “We also are keen to deliver additional drilling success with our next exploration campaign on our neighbouring Orinduik block in the Basin and the follow-through potential of Exxonmobil’s recently announced multiple well pre-permitting on the Canje Block next year.”


“We are entering a very busy period of drilling and updating drilling plans and we look forward to updating the market in the coming months on our progress of the Orinduik Block and on the Sapote-1 results.”


Eco owns a 10% interest in JHI Associates whilst Westmount holds 7.5% of the same company.


JHI partners Exxon with a 17.5% stake in the Canje block.

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