Argentina Operational Update

RNS Number : 4078N

Echo Energy PLC

20 May 2020

 

20 May 2020

Echo Energy plc

("Echo" or "the Company") 

Argentina Operational Update

Echo Energy, the Latin American focused upstream oil and gas company, is pleased to provide an operational update regarding the Company's producing assets at Santa Cruz Sur.

Daily production and operations in the field have continued uninterrupted, delivering  produced gas to customers. Production levels remain, and are expected to remain, in line with the Company's expectations with   net production 2020 year to date, over the period from 1 January to 17 May 2020, of an aggregate of 310,474 barrels of oil equivalent (including 59,779 barrels of oil and condensate and 1,504 million standard cubic feet of gas), an average production rate of 2,250 barrels of oil equivalent per day.

Following the recently announced Argentinian Government's domestic oil price support measures, the Company is currently assessing the positive implications for its Santa Cruz Sur assets, including the prospect of increasing oil production from previously temporarily shut in wells.

The Company is also pleased to confirm that it has secured extensions or volume increases to existing contracts with two key gas customers for May and June. As a result the weighted average contracted gas sales price for these months, of US$3.56 per mmbtu (where applicable, calculated with the official exchange rate of the Government of Argentina) , is expected to be 41% higher than the weighted average contracted price achieved in April and calculated on the same basis.

The Company also confirms a change in VAT status to its subsidiary, Eco Energy TA Op Limited,   which holds a 25% interest in the Santa Cruz Sur assets (of Echo's total 70% interest). Prior to confirmation of the change, Echo Energy TA Op Limited was subject to full VAT retentions of 21% of domestic sales revenue. The change in status, with effect from 1 April 2020, now means that VAT retention on domestic sales revenues has  been reduced to 10.5%, boosting revenue recovery for Echo Energy TA Op Limited on all domestic sales by 10.5%. A further change in the registration status is in progress so that the subsidiary will no longer be required to pay VAT retentions on invoiced domestic income, as is now the case for Eco Energy CDL Op Ltd as announced on 25 March 2020.

Martin Hull, Chief Executive Officer of Echo Energy, commented:

"Having moved quickly to implement measures to protect our staff, contractors and operations from the impact of COVID-19, I am pleased to report that production at Santa Cruz Sur has continued without interruption and is in-line with Company expectations.

The extension of contracts with two key customers, at a premium to the April price, highlights the demand for our produced gas and provides a considerable boost to near term revenues.

We have been working closely with the local tax authorities for a number of months to secure the change to the VAT status for our Eco Energy TA Op Limited subsidiary and this will positively impact cash flow."

For further information, please contact:

Echo Energy Martin Hull, Chief Executive Officer	via Vigo Communications
Vigo Communications (PR Advisor) Patrick d'Ancona Chris McMahon	[phone]
Cenkos Securities (Nominated Adviser) Ben Jeynes Katy Birkin	[phone]
Shore Capital (Corporate Broker) Jerry Keen	[phone]

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. Mmbtu means million British thermal units.

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

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