By Martin Clark
These are rough times for a lot of independents, the world over. Canada’s Eco (Atlantic) Oil & Gas, is a leading player in Namibia’s nascent upstream sector, is at least facing up to the many challenges, putting in place new financing to help it navigate this troubled period.
Oil prices have plunged more than 50 percent since last year, forcing many firms to halt their exploration plans or to cut staff just to stay afloat.
Eco is listed on the TSX Venture exchange and now has a US$10 million buffer in place that will keep things going for the next year and a half. It’s also carried on some of its exploration projects to keep the momentum going on the ground.
Sensibly, however, the oil junior has also cut expenses, mirroring the industry trend. In Namibia, several major partners have joined Eco’s projects, including Azinam and Tullow Oil, which carries the company in executing its exploration plans. This includes the drilling of a well on one of its blocks.
“Not only has the company proved that it can survive in this poor environment” said executive vice president and co-founder Alan Friedman in a recent update, “but it has demonstrated that it can execute transactions with oil majors in one of the worst oil environments and find creative ways to raise cash.”
The company went on to acquire co-explorer Pan African Oil, solidifying its position as the dominant license holder offshore Namibia.Despite dried up equity markets, it says it’s also looking at at other new assets in Africa.
According to Friedman, Eco is looking for opportunities in “geopolitically attractive jurisdictions that make economic sense and Some investors might be a little wary of taking on any new responsibilities during these tough times, but Eco’s clearly thinking long term.
“We will certainly keep our eyes open for prospective projects,” Friedman added.
For now, the main goal is having cash in the bank and getting through the current state of weak oil prices, all the while, seeing activity continue o the ground via its carried exploration position.
Management have showed their confidence with a share buyback programme through a normal course issue bid. The board of directors and management together currently hold around 45 per cent of Eco’s issued and outstanding shares.
However, in what sounded more like an invitation, Eco also referred to itself in an April 13 update as “a great investment opportunity”. “We are financially comfortable, have technically prospective blocks in geopolitically attractive countries, and have world class partners who are assisting financially and technically with the development of our assets,” it said.
The company has put together a good business in Namibia and that would not have gone unnoticed by other, larger upstream players with an eye on Africa, or those who fancy a bit of deal-making.
It’s unwise to second guess in the current climate, but in this sort of market all options are usually on the table. Whatever direction Eco goes, and whatever projects it may be looking at, the company is in a stronger position than many of its peers to decide what happens next.