Malcy`s Blog28 Aug 2018 16:35
Echo Energy
Echo report this morning on the well completion at CSo-2001 (d) in the Fracción D asset onshore Argentina. Despite having significant gas and hydrocarbon shows recorded on both the drilling and wireline log data testing has shown that extensive production from the adjacent Springhill formation has caused significant pressure depletion across the western flank of the field. Accordingly the remaining gas will be insufficient to contribute economically to the Fracción D gas project.
This depletion does not impact the Eastern flank of the Canandon Salto field, which remains economically viable as demonstrated through testing and pressure monitoring of the CSo-85 well and that the extensive gas resource and that asset will now be monetised following planning, sizing and timing of required infrastructure. The Quintana-1 rig will now remain in the field for the necessary pulling jobs to restore or increase current production which should be completed within six weeks. These jobs, designed to enable a near term boost to oil production should lead, in due course, to further announcements of oil sales.
In the meantime there is still much activity across the portfolio, with planning for the stimulation of the ELM-1004 well and further evaluation and testing of the EMS-1001 year later on in the year. Whilst the market reaction to this news seems to me rather overdone, given that so much work is needed on these prospects, and I don’t believe that this is a major disappointment given the number of opportunities that lie in this basin alone.
The test result was of course disappointing given its proximity to an earlier well that tested gas at good rates prior to the extensive field production, but the fact that the Eastern flank still looks viable should offset any major worries about the area and accordingly the fact that the shares are now back to 11.5p seems a good opportunity for investors. Indeed, we should be looking forward to a number of pieces of newsflow around the Tapi Aike seismic and planning shortly in the not too distant future so I suggest that today’s fall has been overdone
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