French oil and gas major Total has agreed on an option to acquire a working stake of 25% from Eco (Atlantic) Oil & Gas in the Orinduik Block contained in the offshore Guyana-Suriname basin.
The agreement was inked by Total E&P Activités Pétrolières and Eco Atlantic (Guyana), the respective subsidiaries of Total and Canadian exploration company Eco Atlantic.
As of now, Eco Guyana has a working stake of 40% in the 1800 km2 Orinduik shallow water block which is operated by Tullow Oil with a stake of 60%. The Orinduik block is located 170 km offshore Guyana and 6.5 km from the recent Liza discovery by Exxon Mobil.
According to Eco Atlantic, the offshore block directly offsets a line of discovery wells drilled by ExxonMobil in its Stabroek Block in the Guyana-Suriname Basin. ExxonMobil had estimated the Stabroek Block to contain 2.25-2.75 billion barrels of recoverable oil.
Eco Atlantic president and CEO Gil Holzman said: “The deal not only validates the quality of the Orinduik block as a highly prospective license, it also validates Eco's long term strategy - to identify highly prospective assets in frontier basins, with favourable Petroleum Agreement terms, and with world class partners.
“In the event that the option is exercised by Total, the deal proceeds will recoup all our expenses on the expanded 3D program and fund us for drilling a minimum of two wells based on current well costs.”
As per the terms of the option agreement, Total will make an immediate payment of $1m and will pay an additional $12.5m if it exercises its option to buy the 25% stake from Eco Atlantic.
Total will have 120 days of time to exercise its option upon completion of processing of the 3D seismic on the Orinduik Block.
The transaction is subject to the Guyanese government approval among other regulatory approvals.