(Alliance News) - Echo Energy PLC on Tuesday said it plans to sell 65% of its 70% working interest in Santa Cruz Sur in Argentina, as the company grappled with over 100% year-on-year inflation in the country.
Under the proposed sale to Selva Maria Oil SA and Interoil Exploration & Production ASA, Echo Energy will receive GBP1.7 million in cash.
The Latin America-focused energy company explained that the sale addressed its near-term funding challenges by providing near term funding. Echo Energy said this enabled it to "walk away" from the significant Argentina-based creditors which had build up during the Covid-19 period and provided it access to funding for the Santa Cruz assets.
The company did not clarify whether it had any debts. In February, it had reported a cash balance of USD1.1 million as at January 2.
Martin Hull, Chief Executive Officer of Echo Energy said: "This is a transformational moment for the company as we look to put our recent challenges behind us and create a new, stronger and more financially robust platform from which to take the company forward. Not only does it immediately improve our balance sheet, it also brings optionality with the Colombian opportunity, as well as giving us continuing revenues, with additional upside should the Buyers of the asset interest be able to deliver the investment and production growth that our financial limitations have prevented us from doing."
Echo Energy shares were 31% higher at 0.04 pence each in London on Tuesday morning.
By Tom Budszus, Alliance News reporter
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Echo Energy (ECHO)