(Echo, 6.Mar.2020) — Echo Energy, the Latin American focused upstream oil and gas company, provides an update on production and operations following the Company’s recent acquisition of a 70% non-operated working interest in the Santa Cruz Sur assets, onshore Argentina.
The Company also announces a two-year extension to the Company’s existing £1.0 million loan originally provided to the Company in March 2017 and now held by Spartan Class O (the “Lender”), a sub-fund of Spartan Fund Limited SAC (the “Loan”).
Production and Operational Update
Average net daily production from Santa Cruz Sur during February 2020 was 2,410 boepd (including 561 bbls of oil and condensate per day and 11.1 mmscf of gas per day).
Production over the period from 1 November 2019 to 29 February 2020 reached an aggregate of 298,140 boe net to Echo (including 67,823 bbls of oil and condensate and 1,382 mmscf of gas). During the period an aggregate net 215 mmscf of gas was utilised in the field for fuel and power.
During February 2020 two cargoes of oil and condensate were sold, including the cargo previously announced as in progress at the me of the Company’s 5 February 2020 announcement, with cumulative sales of 33,424 bbls net to Echo, with an average sales price (including where applicable VAT recovery) of US$ 47.90 per boe, a premium to the currently prevailing local market price at the time of this announcement.
The Company confirms receipt of full payment for the cargo lied on 5 February with payment for the second cargo expected, as per normal payment terms, in the second half of March.
Delivery of produced gas to customers has continued without interruption, at an average realised price, reflecve of the current season (including where applicable VAT recovery), of US$2.72 per mmbtu (prices ranging from US$1.5 to US$5.1 per mmbtu during the period). As demonstrated by the c. 19% increase in average gas price achieved during February 2020 when compared to the average price of US$2.21 per mmbtu achieved by the Company between 1 November 2019 and 31 January 2020, Argentian summer gas prices are at a discount to annual averages and the Company expects to achieve higher realised prices moving into the autumn and winter months versus the summer months now behind us.
Whilst the Company’s production in Argentina has continued in line with the Board’s expectations since the me of the Santa Cruz Sur acquisition, and in light of the recent movements in oil prices and the potential for ongoing volatility in the short term, the Company intends to put in place an additional unsecured standby credit facility, initially of £0.4m and up to £1.0m, with an interest rate broadly in line with the Loan.
As at 29 February 2020 the Company had unaudited cash balances of approximately US$1.4 million and expects to receive, in line with its normal payment terms, additional revenues from both the second February cargo and ongoing gas sales before the end of March 2020. The Company also currently intends for a further oil cargo to be lied during March.
The implementation of this facility is a proactive step intended to provide the Company with access to additional working capital in the short term, if required, including in the event of a continued decline in oil demand driven by recent global events and any, as of yet unforeseen, local impacts.
Extension of Existing Loan
The Company also announces that it has agreed a two-year extension of the Loan.
The interest rate of the Loan, which was previously due for repayment on 9 March 2020, remains unchanged. The Company has agreed that the extended Loan will now be repayable as follows: (a) £100,000 on 30 November 2020; (b) four quarterly installments of £50,000 on the last business day of the relevant month commencing in March 2021; and (c) the balance of £700,000 on 8 March 2022.
In connection with the extension of the Loan, the Lender has been issued with 3,571,428 warrants to subscribe for new ordinary shares in the Company at a price of 1.4 pence per new ordinary share and with an expiry date of 9 March2022.
Campo Limite Testing Update
The Company looks forward to updating shareholders on testing operations at the Campo Limite (CLix-1001) well at Palermo Aike, which are now underway. ***
