Eco Atlantic undertakes strict cost-cutting programme in response to oil price crisis

Apr 02, 2020 News

– Board, Management taking pay cuts of up to 40%
– Will remain fully funded for Guyana wells when market improves

Given the recent lower oil price environment and current market conditions resulting from COVID-19 since February 2020, Eco Atlantic announced that it has undertaken a strict cost-cutting programme across all aspects of the business, aside from the necessary maintenance of certain operations.
These include the termination of non-core services and cessation of business-related travel. In addition, the Board and management are voluntarily taking pay cuts of up to 40 percent starting in April 2020. Eco said that this will be kept under review on a monthly basis thereafter.
Further to this, the company said that it will continue to monitor its operating budget for 2020 and work closely with its partners to discuss and plan next steps.
To date, Eco has met all of its work commitments for 2020 under the various petroleum agreements offshore Guyana and Namibia, and thus only minimal costs are expected to be incurred over the remainder of the year.
As at March 31, 2020, the company continues to benefit from its strong balance sheet, with cash and cash equivalents of CAD$26.5 million (US$18.8 million) and zero debt. Eco also reminded that it remains fully funded for its share of further appraisal and exploration drilling at Orinduik Block offshore Guyana, up to US$120 million (gross).
In light of the cost-cutting measures described above to preserve the company’s significant cash balance, the Board believes Eco will be in a robust position to progress its exploration strategy when market conditions improve and operations are able to resume.
ORINDUIK JV PARTNERS
In January 2016, Eco signed a Petroleum Agreement and is party to a Petroleum Licence with the Government of Guyana and Tullow Oil for the Orinduik Block offshore Guyana.
Tullow Oil, as the Operator of the Block, paid past costs and carried Eco for the first 1000km2 of the 2550km2 3D Survey. Further, Tullow contributed an extensive 2D seismic data set and interpretation.
The Company’s 2550 km2 3D seismic survey was completed in September 2017, well within the initial four-year work commitment the Company made for the initial 1000km2.
In September 2017, Eco announced that its subsidiary, Eco Atlantic (Guyana) Inc. entered into an option agreement on its Orinduik Block with Total, a wholly-owned subsidiary of Total S.A. Pursuant to the option.
Total paid an option fee of US$1 million to farm-in to the Orinduik Block. An additional payment of US$12,500,000 was made when Total exercised its option to earn 25 percent of Eco’s working interest in September 2018.
Following the exercise of the option by Total, the Block’s working interests became: Tullow – 60% (Operator), Total – 25% and Eco – 15%.

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