“I think everyone hopes to be the next Cove, but the only one that really offers something like that is the Guyana blocks,” said Ashley Kelty, a Cantor analyst. “That’s the closest to Mozambique that we’ve had for a long time.”
Higher oil prices may seem like the pot of black gold at the end of the rainbow for wildcat explorers in frontier plays. But even with talk that prices of $100 a barrel could again be in sight, investors are wary before taking the gamble, Bloomberg said in a recent report.
Even for companies which strike oil or gas, such as Cobalt International Energy Inc. as part of a venture in Angola, the end result can still be bankruptcy.
Investors have been put off in general from funding small explorers after a series of failures, David Round, an analyst at BMO Capital Markets, said. There will always be room for them, even to go to frontier regions, “but we’re really looking for other industry players to fund these types of things,” he said.
Cove Energy Ltd is one of the success stories for small explorers, especially in Africa. In 2009 it acquired an 8.5 percent stake in an exploration block operated by Anadarko Petroleum Corp. shortly before a major discovery by the operator. The company was subsequently sold for almost $2 billion.
“I think everyone hopes to be the next Cove, but the only one that really offers something like that is the Guyana blocks,” said Ashley Kelty, a Cantor analyst. “That’s the closest to Mozambique that we’ve had for a long time.”
Tullow Oil Plc has stakes in Guyana, which is why shareholders could shake off the well they missed in Namibia last month, he said. Eco Atlantic Oil & Gas Ltd. also has stakes in both plays and its stock is up 80 percent this year. Hannam analysts are watching for the appraisal of Exxon’s Hammerhead discovery in Guyana, which extends onto Eco’s block as a possible “catalyst” for the company.
ExxonMobil announced its ninth discovery offshore Guyana at the Hammerhead-1 well on August 30, proving a new play concept for potential development. Hammerhead-1 encountered approximately 197 feet (60 meters) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 13,862 feet (4,225 meters) depth in 3,373 feet (1,150 meters) of water.
The company said there is potential for additional production from significant undrilled targets and plans for rapid exploration and appraisal drilling. A second exploration vessel, the Noble Tom Madden, is due to arrive in Guyana in October to accelerate exploration of high potential opportunities and will commence drilling at the Pluma prospect approximately 17 miles (27 kilometers) from Turbot.
