The more than 50 percent nosedive in Eco Atlantic’s share price following news that the Orinduik Block has heavy oil, is not just an extreme overreaction but is tantamount to writing off the entire block. This was recently noted by Eco Atlantic’s Chief Executive Officer (CEO) Gil Holzman who, in an appeal to investors, reminded that the company has barely scratched the surface of the block’s true potential.
In fact, Holzman stressed that heavy oil on the block should not be viewed as bad news since there is a thirst for heavy oil in the USA for example.
During an industry update on a podcast called ValueTheMarkets, the CEO said, “There are many heavy oil-producing fields in the region producing and there is a big demand for such heavy oil especially after Venezuela’s oil production was shut down, and therefore, there are many US refineries that are thirsty for this kind of oil.”
He added, “Heavy oil is not bad at all. The question is whether it can actually flow to the surface. We also need to assess additional ingredients of the reservoir and in our case, we see some very positive indicators such as overpressure and high porosity… We will run all kinds of production scenarios to see what will be the way forward.”
While he understands that investors would have preferred lighter crude, and in the absence of the same, are disappointed, Holzman said that an over 50 percent drop in the share price is an extreme overreaction.
In this regard, Holzman said, “It is not the lightest oil on earth but the share price reaction is as though they have written off the entire block and huge upside potential of the company. You have to remember that it was only recently that we kicked off our exploration campaign…we have only scratched the surface…”
The CEO stressed that there are many other targets on the Block, most of which are in the cretaceous play and therefore offer a higher potential for lighter oil. In fact, he reminded that company reports note that it has three billion barrels of recoverable resources in the cretaceous play that will warrant a lot of drilling activity in years to come starting with two wells next year with the exact location to be announced soon. “So the share price reaction is like writing off Guyana and I think that is a big mistake,” the official concluded on this matter.
