Last checked at 24 Feb 2021 07:00
24 February 2021
Echo Energy plc
("Echo" or the "Company")
Operational Update
Facilities upgrade to enable increased short and long-term production
Echo Energy, the Latin American focused upstream oil and gas company, is pleased to provide an update on operations at its Santa Cruz Sur assets, onshore Argentina.
Investment in facilities to enable increased liquids production
Following continued improvements in market conditions the Company has agreed, together with the Santa Cruz Sur partners, to capital expenditure to upgrade and debottleneck the existing liquids pipelines in the Santa Cruz Sur assets to accelerate the return to full oil production and to bring the remaining volumes previously shut in in Q2 2020 back online. The pipeline upgrades will also provide additional capacity for future production enhancement projects that have been identified in the Company's opportunity portfolio at Santa Cruz Sur.
Capital expenditure net to Echo's 70% working interest of around US$ 275,000 will be injected by the Company to replace and upgrade parts of the infrastructure primarily in the Chorillos, Campo Molino and Cerro Convento fields with installation expected to take approximately 45 days from conclusion of successful procurement. Ten individual upgrade projects will be completed to enable the upgrade of around 23 km of pipeline.
It is anticipated that once the pipelines are fully operational, gross daily liquids production will be restored to levels of between 480 bopd - 600 bopd (336 - 420 bopd net Echo). The actual level of production resumed will be dependent on reservoir behaviour and pressure build up since this element of production was shut in in April 2020.
In light of current attractive market conditions this infrastructure project is considered an attractive investment with the ability to result in strong cashflow generation and a short payback period of months.
Production Update
Daily operations in the field at Santa Cruz Sur continue with the delivery of produced gas to customers as expected. Production levels remained in line with the Company's expectations with average daily production, net to Echo's 70% interest, from Santa Cruz Sur throughout 2020 of 1,966 boepd (including 10.2 MMscf/d of gas). Total cumulative production from Santa Cruz Sur during 2020 net to Echo was 720,000 boe (including 3,750 MMscf of gas) and 2021 production remains strong. Gross cumulative production from Santa Cruz Sur for the period 1 January 2021 to 14 February 2021 was 116,040 boe (net 81,230 boe).
Increased frequency of Oil Sales
Given the indications of an improving macro-economic outlook and, specifically, the increase in oil prices from the start of 2021, there has been an increased demand for Santa Cruz Sur oil, resulting in improved pricing and, as a result, more frequent oil sales. Oil sales to date in 2021 have totalled 17,600 bbls net to Echo.
Martin Hull, Echo's Chief Executive Officer, commented:
"We are very pleased to be making continued progress across the portfolio as market conditions continue to improve. The Company's investment in improved and renewed infrastructure at Santa Cruz Sur is both consistent with Echo's commitment to HSE in the field and provides additional capacity for the opportunities the portfolio holds to increase production and revenue. With stable production and several growth opportunities to pursue, we feel positive about the Company's prospects for 2021, especially having announced earlier this week, pending noteholder approval, progress in the restructuring of the Company's balance sheet. With a firmer financial footing and material operational upside which we are actively pursuing, I look forward to updating shareholders with further good news in due course."
For further information, please contact:
Echo Energy Martin Hull, Chief Executive Officer
| via Vigo Communications |
Vigo Communications (PR Advisor) Patrick d'Ancona Chris McMahon
| +44 (0) 20 7390 0230 |
Cenkos Securities (Nominated Adviser) Ben Jeynes Katy Birkin
| +44 (0) 20 7397 8900 |
Shore Capital (Corporate Broker) Jerry Keen | +44 (0) 20 7408 4090 |
Note
The assignment of Echo's 70% non-operated participation in the Santa Cruz Sur licences is subject to the authorisation of the Executive Branch of Santa Cruz's Province, which is part of the overall process of title transfer that is proceeding as anticipated. boe means barrels of oil equivalent; boepd means barrels of oil equivalent per day; MMscf mean million standard cubic feet of gas; MMscf/d means million standard cubic feet of gas per day.
Certain of the information contained within this announcement is deemed by the Company to constitute inside information as stipulated under The Market Abuse Regulation (EU 596/2014) pursuant to the Market Abuse (Amendment) (EU Exit) Regulations 2018. Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.