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RNS Number : 3364Z Echo Energy PLC 31 August 2018 31 August 2018 Echo Energy plc ("Echo" or the "Company") Signature of LOI for New Technical Evaluation Agreement - Rio Salado (Bolivia) Update on Oil & Gas Pricing and Sales Echo Energy plc, the Latin American focused upstream oil and gas company, is pleased to announce the signature of a Letter of Intent ("LOI") to sign a new one year Technical Evaluation Agreement ("TEA") with YPFB (Yacimientos Petrolíferos Fiscales Bolivianos) over the Rio Salado licence area, onshore Bolivia. This LOI, signed at the first YPFB Bolivian Gas Forum in Santa Cruz Bolivia on 30 August 2018, will allow the exclusive agreement for the Company 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, acquired in 2015 / 2016, which transect part of the block and will be invaluable in definition of the deep multi-tcf structure mapped across the Rio Salado and Huayco blocks. At the end of the TEA period the Company will have the right to negotiate contract terms with YPFB across the licence area should it elect to do so. The acquisition of an interest by Echo in Rio Salado remains contingent on final commercial terms being agreed. Accordingly the Company does not have an interest or the right to acquire any interest at this stage. Separately Echo is pleased to announce that through agreement with its partner, Compañía General de Combustibles S.A. ("CGC"), it is to receive US$ for all sales of gas instead of Argentine Pesos to further reduce its exposure to the Peso. The gas sales remain denominated in US$ but had previously been settled in Pesos. All oil sales continue to be denominated in US$ with settlement for exported sales received in US$ whilst domestic sales are converted to and settled in Pesos. The Company's treasury policy is to hold all cash in GBP, USD and Euros, and as previously announced, the weakening currency results in a small net positive effect on the Company due to a fall in local operating costs. During the month of August Echo has sold approximately 71 million standard cubic feet of gas into the Argentinian market whilst a further 24 million standard cubic feet of gas produced at the wellhead has been utilised for fuel and power.Year to date average pricing across the customer base has been above $4.20/mmbtu through to July 2018. An export cargo of c. 9,450 barrels of oil net to Echo is waiting to be loaded from the Punta Loyola terminal, Rio Gallegos. A domestic sale of a further c. 6,400 barrels of oil net to Echo was completed earlier in August. Receipts for the combined oil sales are expected to be in the order of US$1 million. Fiona MacAulay, Chief Executive Officer of Echo, commented: We are delighted to have signed an LOI relating to a new Tec
I emailed Fiona Me: Firstly, the recent RNS wasn’t what was expected however I still believe it has potential to be a recoverable success. Therefore, I would like to know what are the next steps for this well and what is the potential time frame. Secondly, we are moving on to the next well so when will this commence and how long may it take, keeping in mind the problems we have faced with the first well and what shall we do to overcome these problems in the future. Fiona’s response: Thanks for the email and the good wishes, always happy to answer questions but of course the responses are restricted to information in the public domain as I'm sure you know. In relation to the ELM well we are working with the Operator and the company that performs the well stimulations in the area, once the design is completed and we know the equipment availability we will update the timing. In terms of the 'issues', cement bond in a well is clearly important to good testing, and formations can react with the cement causing that bond to be of a poorer quality (particularly if gas is in the system). We will just have to work with the cement conditions and be aware where we have a poorer bond that remediation may be necessary. In terms of the stimulation - this is down to the rocks, if they dont want to flow the gas naturally then we have to 'persuade' them to flow and I'm afraid that is the nature of operations. I do understand shareholders frustration and we try to incorporate that into moving as quickly as we can - but that cant be at the expense of ensuring our chances of success are as high as they can be. For the next well as we have previously indicated the well testing operations (which use a very small rig) take around 3-4 weeks after the rig arrives on location. Hope all of that helps and thanks again for your email
I think so too, we expected an easy ride with no problems but that’s usually not the case with big things. However as I said previously I would like a bit more of an update as to when we start the second well how long it will potentially take and how will we deal with the first well with an expected time frame