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LONDON (Alliance News) - Echo Energy PLC said Friday it will receive US dollars for gas sales in Argentina instead of Argentine pesos, as it also signed a letter of intent to sign a new one-year technical evaluating agreement for the Rio Salado licence area in Bolivia.
South American focused upstream oil & gas company Echo said it has agreed with its partner Compania General de Combustibles SA to receive US dollars for all sales of gas instead of Argentine pesos to "further reduce its exposure to the peso", which has been under severe pressure of late in currency markets.
Echo said gas sales remain denominated in dollars but had previously been settled in pesos. Oil sales will still be denominated in dollars with settlement for exported sales received in dollars, whilst domestic sales are converted to and settled in pesos.
Echo's policy is to hold all cash in dollars, sterling and euros.
The oil & gas company said the weakening Argentine currency will result in a "small" net positive due to a fall in local operating costs.
In August, Echo sold about 71 million standard cubic feet of gas into the Argentine market.
Meanwhile, the letter of intent signed by the company in Bolivia - signed with Yacimientos Petrolíferos Fiscales Bolivianos - will allow Echo Energy exclusive access to continue the technical evaluation of the block over the coming year.
The work programme will include the interpretation and integration of three 2D seismic lines which transect part of the block.
At the end of the 12 months, Echo has the right to negotiate contract terms with Yacimientos Petrolíferos Fiscales Bolivianos across the licence area.
Echo Chief Executive Officer Fiona MacAulay said: "We are delighted to have signed an letter of intent relating to a new technical evaluation agreement which would secure a further period of time to evaluate the prospectivity of this licence area, incorporating additional 2D seismic data not previously available. During the next 12 months the company will be in a position both to extend its understanding of the deeper structure and also to incorporate the results of the two important wells currently drilling in the area.
"We are also very pleased that the strong market for oil exports continues in the region and that receipts in US dollars are particularly positive for further reducing the exposure of the company to the current volatility of the Argentinian peso."
Shares in Echo Energy were up 0.6% Friday at 12.22 pence each in London on Friday.