(Alliance News) - Echo Energy PLC on Friday said it has signed a deal to sell 65% of the company's 70% working interest in Santa Cruz Sur for GBP1.7 million.
The Latin America-focused energy company said the assets are being sold to Selva Maria Oil SA and Interoil Exploration and Production ASA.
The sale is intended to provide near-term funding to cope with current challenges.
The acquisition consists of GBP825,000 cash consideration, with GBP75,000 due immediately, as well as contingent cash payments of up to GBP500,000 aggregate and GBP400,000 payment in kind via the issue of shares in Interoil and Production upon completion of the sale.
The firm said the shares offer it additional upside exposure to the Santa Crus Sur assets. Echo will also retain a 5% non-operated working interest in the assets.
Echo noted that its 5% interest will also receive a 10-year financial guarantee in order to meet the requirements of the Argentine authorities.
The firm also added that it plans to evaluate the prospect of acquiring a producing Colombian portfolio from the buyers of its Santa Cruz Sur assets. The company added that this would allow it to drill an exploratory well.
Echo Energy shares fell 6.3% to 0.03 pence each in London on Friday afternoon.
By Harvey Dorset, Alliance News reporter
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Echo Energy (ECHO)