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LONDON (Alliance News) - Echo Energy PLC on Monday announced a switch in focus in Argentina as well as a new chief executive.
Shares were 18% higher in London at a price of 2.98 pence each.
Echo has agreed to a new relationship with Argentina partner Compania General de Combustibles SA, which will see the two focus on Echo's Tapi Aike licence.
Echo will now hold 19% of the licence and pay 19% of costs, "significantly" lowering the company's obligations. CGC will release USD2.1 million of cash earmarked for the Fraccion C, Fraccion D, and Laguna Los Capones assets to go to Tapi Aike.
Previously, Echo had 50% of Tapi Aike and had agreed to pay 65% of drilling costs across four wells.
The two also won't go ahead with the second phase at Laguna Los Capones, which will save Echo some USD11 million.
Echo is continuing to acquire seismic data for Tapi Aike, which it said represents "significant potential upside" for its investors ahead of the start of drilling in the last quarter of 2019.
"The board has reviewed Echo's onshore Argentinian portfolio following recent operations in the country with a view to establishing the best way forward in terms of risk-reward balance and capital allocation," said Echo.
"Early seismic indications serve to reinforce the company's positive view of Tapi Aike as Echo's key strategic priority, whilst identifying the route to best utilising the company's funds in support of the Tapi Aike drilling campaign, has also been a key consideration."
On the management front, Echo announced the promotion of Martin Hull as chief executive with immediate effect. He replaces Fiona MacAulay, who stepped down in December.
Hull, who was previously chief financial officer, became managing director at the time, but he has now moved to CEO.
Hull commented: "I strongly believe this transaction marks a significant turning point for Echo Energy, providing a much firmer financial footing, nearer term drilling and clearer strategic focus on high reward exploration.
"The restructuring retains a potentially highly material stake in Tapi Aike, offering significant potential upside for equity investors, whilst substantially reducing our capital requirement and accelerating drilling."
"In addition to delivering the Tapi Aike exploration programme my team and I will now focus on new business development to expand our regional footprint," he concluded.