Interim Results

RNS Number : 4557N

Echo Energy PLC

30 September 2021

 

30 September 2021

Echo Energy plc

("Echo" or "the Company")

Interim Results

Echo Energy, the Latin American focused upstream energy company, announces its unaudited interim results for the six months ended 30 June 2021. 

H1 2021 Highlights:

· Refocus of capex away from high-risk exploration into lower risk-production opportunities with swift pay back.

· Gross profit of US $0.4 million (H1 2020: loss of US$ 1.6 million).

· Revenue increase of 5% to US $5.9 million in H1 2021 (H1 2020: US $5.6 million).

· Reduction in cost of sales of 33% in H1 2021 compared to equivalent period in H1 2020

· Total net aggregate H1 2021 production of 304,639 boe (including 37,159 bbls of oil and condensate and 1,605 MMscf gas).

· New gas sales contracts in place from May 2021 with premium pricing from innovative price auction.

· Strong domestic gas prices supported enhanced cashflow generation with a 28% increase in gas price compared to same period a year ago with premium gas prices only coming into effect in last two months of the period.

· Successful completion of the restructuring of both the  Company's EUR 20.0m 8.0% secured notes  and  the Company's EUR 5.0m 8.0% secured convertible debt facility loan.

· Echo received a successful VAT cash disbursement from the Argentine Government of US $0.5 million, a further signal that the country  is progressing towards more regular activity.

Enquiries:

Echo Energy

Martin Hull, Chief Executive Officer  via Vigo Communications

Vigo Communications (PR Advisor)  [phone]

Patrick d'Ancona

Chris McMahon 

Cenkos Securities (Nominated Adviser)   [phone]

Ben Jeynes

Katy Birkin

Shore Capital (Corporate Broker)   [phone]

Jerry Keen

Certain of the information communicated within this announcement is deemed to constitute inside information for the purposes of Article 7 of EU Regulation 596/2014 (as amended), which forms part of domestic UK law pursuant to the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Chairman and Chief Executive Officer's Statement

The first six months of 2021 have seen Echo Energy plc ("Echo" or  the "Company") emerge from the previous year's challenges both operationally and financially stronger. The Company moved swiftly  to successfully restructure its debt, continue to conserve cashflow, begin to reinstate previously shut in production wells, and refocus its portfolio on progressing cashflow enhancing rapid return production opportunities. We have executed our strategy of moving away from high-risk exploration spend into lower risk-production opportunities with attractive pay back periods.

These important achievements and the improving macro environment combined with our commercial successes, including the renegotiation of gas sale agreements at substantial market premiums during the period, are reflected in an improved financial performance for the period. 

As Echo continues its return to full liquids production at Santa Cruz Sur, and improved financial flexibility, we continue to identify and progress growth options across the existing portfolio, and the wider region, and work towards overcoming remaining challenges whilst maintaining our commitment to delivering value for our shareholders.

COVID-19 recovery and progress on production

At the beginning of the 2020 COVID-19 pandemic, extreme volatility in the energy markets resulted in the inability of the Company to sell crude oil and precipitated a decision to preserve cash through the temporary shut in of a significant number of Echo's oil producing wells. However, following continued improvements in market conditions, including a return to regular oil sales, Echo agreed, together with its Santa Cruz Sur partners, to upgrade and debottleneck the existing liquid pipelines that were previously shut in Q2 2020, as a path to returning to full oil production.

Expenditures of approximately US $0.3 million were injected by the Company to replace and upgrade parts of the Santa Cruz Sur infrastructure and reduce maintenance costs. By June 2021, Echo successfully delivered the project, demonstrating the effectiveness of the Company's in-country operational capability and enabling production previously shut in in April 2020 to be systematically brought back on line.  A detailed update on liquid production increases was provided to the market in August 2021 with around a 50% increase in liquids production. This has enabled the Company to benefit from the upswing in global oil prices and the improved macro-outlook, symbolising a strong recovery from the challenges of the previous year. Whilst overall production, including gas remains below pre pandemic levels, the company continues to work towards improving production by undertaking the necessary operational activities and investments. With improved economic tailwinds and new infrastructure installed in the field, Echo now has the capacity to commission incremental enhancement projects within its portfolio. The reinvestment of available cashflow to drive further production increases remains an ongoing focus.

These increasing cashflows are expected to enable further production investments to be funded and demonstrate Echo's commitment to and confidence in its organic growth strategy within the Santa Cruz Sur asset base.

Successful execution of sales contracts at premium prices

In March 2021, Echo secured two new gas sales contracts at significant premiums to both prevailing spot market rates and 2020 contracted rates, with approximately 70% of gross daily gas production from Santa Cruz Sur allocated to industrial customers now committed under secured contracts until April 2022.

Following the Company's announcement in March 2021 relating to new gas sales contracts for 2021-2022, the Company agreed summer and winter pricing for its annual industrial clients, with the contracted winter premium providing substantially increased cashflow in the near term, helping to grow future operations through production enhancement work activities supported by infrastructure and compressor maintenance programmes.

In Q2, increasing liquids production represented delivery upon the Company's strategy to leverage the marked upswing in global commodity prices. With the additional liquids production expected to continue to contribute to a material cashflow increase, Echo continues to benefit from an improving domestic market situation. In May 2021, the Company sold gas to the spot market at an average price representing a 151% increase in prices compared to the March 2021 average spot price. All gas production, as of May 2021, was sold under the new gas sales agreements, reflecting significantly increased winter pricing. Any gas volumes not sold under the long-term contracts was sold to the spot market.

Delivery of successful debt restructuring preserving cash resources

In March 2021, Echo undertook a process of restructuring its debt to build a solid financial platform for reinvestment of its increasing cashflows into the Company's assets to deliver growth. The restructuring was successfully completed in April 2021, when holders of the Company's publicly listed bonds voted in favour of the restructuring of those securities. As a result, cash interest payments on  the Company's listed bonds have been deferred until mid-May 2025. The completion of the bond restructuring also fulfilled the remaining condition of the Lombard Odier debt restructuring, which similarly pushed back maturity and preserved cash resources.

 The company's balance sheet remains highly leveraged, and trade creditor levels are elevated reflecting the challenges presented by the pandemic, but the restructuring, along with the increased oil production following the ongoing infrastructure upgrades, provides a markedly improved and outlook for shareholders.

In May 2021, Echo received a partial VAT repayment from the Argentine Government as it resumed normal activity following months of COVID-19 related shut down. This process provided both material cash funds and further evidence of the normalisation of in-country activities following delays in 2020 caused by COVID-19.

Growth Opportunities

Campo Limite remains a potentially material well  for the Company which could increase reserves and resources in the Palermo Aike concession and open up additional commercial options in the area. Well testing activities remain an operational and commercial focus and work remains ongoing to optimise commercial arrangements to enable activities to resume once pandemic constraints (which were in place throughout H1 2021) are lifted.

At the start of the year, the Company announced a five-year Cooperation Agreement with GTL International S.A, which has interests in both the hydrocarbon and renewables sectors. Both companies continue to collaborate and combine skill-sets to jointly promote their business development initiatives in the wider region, and identify and assess new business development opportunities across the full energy spectrum.

Financial

The six month period ended 30 June 2021 has seen Echo successfully manage value chains, enabling the Company to improve efficiencies at both corporate and asset level.

The Group posted a gross profit of US $0.4 million for the first time since the acquisition of the SCS asset for the six month period ended June 2021 compared to a loss of US $1.6 million for the comparable period in 2020,  attributable to a decrease in cost of sales from US $7.3 million in H1 2020 to US $5.5 million in H1 2021, demonstrating enhanced operational efficiency and commodity prices.

Total revenue for the period was US $5.9 million (H1 2020: US $ 5.6 million), and comprised of US $2.1 million of Oil sales and US $ 3.8 million of Gas sales. Oil prices realised in H1 2021 were on average 21% higher during the period than in H1 2020. Volume weighted average realised gas prices increased by 28% compared to H1 2020.

Financial income of US $3.1 million recognised the interest gained on the Argentine VAT paid to the Group in May 2021 of US $0.24 million and net foreign exchange gains of US $2.9 million. Finance expense of US $ 3.2 million for H1 2021 is on a par with the prior comparable period (H1 2020:  US $ 3.2 million).

Total comprehensive loss for the Group for the 6 month period ending 30 June 2021 was US $1.5 million (H1 2020: US $ 5.7 million)

The Group's balance sheet and overall financial positioning has materially strengthened during the period due to the successful debt re negotiation of its bonds and debt facility and the reduction in  short term loan liabilities from US $2.3 million at 30 December 2020 to $0.14 million at 30 June 2021.

In January 2021, the Company's EUR 5.0m 8% secured convertible debt facility maturity date was extended to April 2025, with no furthercash interest payments due until maturity date. In addition, in April 2021, the Company's Luxembourg listed EUR 20.0m 8% secured bonds were successfully structured, extending the maturity of the notes to May 2025, and removing all cash interest payments prior to maturity date.

The Company's cash balance as at 30 June 2021 was US $ 0.9 million, a substantial increase from the balance as at 31 December 2020.

A 30% reduction of Trade and other payables from 30 December 2020 to 30 June 2021 is primarily due to the renegotiation of the Bond and debt facilities, but also reduction in joint venture payables.

Post Period End Highlights

The positive market changes seen in H1 2021 continue post period, and coupled with the restructuring completed in H1 2021, enable the Company to operate from a significantly more stable platform.

At the Santa Cruz Sur asset level, successful commissioning of the liquids pipeline enabled the Campo Molino oil field to be brought back online, contributing to an almost 50% increase in total liquids production in August 2021.

The maturation of the Company's investment in Santa Cruz Sur, and ongoing careful cost management have increased cashflows, enabling development in our producing asset, and release of capital which can be invested into the business to support business growth, maximising value for shareholders.

James Parsons  Martin Hull 

Chairman  Chie f Executive Officer

Consolidated Statement of Comprehensive Income

Period ended 30 June 2021

	Notes	Unaudited 1 January 2021 30 June 2021 US $	Unaudited 1 January 2020 30 June 2020 US $	Year to 31 December 2020   Audited US $
Continuing operations
Revenue	3	5,891,413	5,656,740	11,126,520
Cost of sales	4	(5,497,993)	(7,287,234)	(13,437,010)
Gross profit		393,420	(1,630,494)	(2,310,490)
Exploration expenses		(45,807)	(68,554)	(215,512)
Administrative expenses		(1,492,010)	(1,480,136)	(3,240,934)
Impairment of intangible assets		-	-	-
Impairment of property, plant and equipment		-	-	-
Operating loss		(1,537,817)	(3,179,184)	(5,766,936)
Financial income	5	3,140,024	1,847	7,142
Financial expense	6	(3,287,229)	(3,212,440)	(10,174,047)
Derivative financial income	7	17,575	642,678	666,306
Loss before tax		(1,274,027)	(5,747,099)	(15,267,535)
Taxation	8		-
Loss from continuing operations		(1,274,027)	(5,747,099)	(15,267,535)
Discontinued operations
Profit/(loss) after taxation for the year from discontinued operations				(10,724,108)
Loss for the period		(1,274,027)	(5,747,099)	(25,991,643)
Other comprehensive income:
To be reclassified to profit or loss in subsequent periods (net of tax)
Exchange difference on translating foreign operations		(177,930)	-	(1,041,995)
Total comprehensive loss for the period		(1,451,957)	(5,747,099)	(27,033,578)
Loss attributable to: Owners of the parent		(1,451,957)	(5,747,099)	(27,033,598)
Total comprehensive loss attributable to: Owners of the parent		(1,451,957)	(5,747,099	(27,033,598)
Loss per share (cents)	9
Basic		(0.10)	(0.81)	(3.38)
Diluted		(0.10)	(0.81)	(3.38)
Loss per share (cents) for continuing operations
Basic		(0.10)	(0.81)	(1.99)
Diluted		(0.10)	(0.81)	(1.99)

The notes included below form an integral part of these financial statements.

Consolidated Statement of Financial Position

Period ended 30 June 2021

	Notes	Unaudited 1 January 2021 30 June 2021 US $	Unaudited 1 January 2020 30 June 2020 US $	Year to 31 December 2020 Audited US $
Non-current assets
Property, plant and equipment	10	2,516,805	986,283	2,552,693
Other intangibles	11	7,773,210	20,725,894	8,511,622
		10,290,015	21,712,177	11,064,315
Current Assets
Inventories		438,014	610,522	541,230
Other receivables		5,846,670	7,688,813	7,229,263
Cash and cash equivalents	12	945,488	1,164,408	682,159
		7,230,172	9,463,743	8,452,652
Current Liabilities
Trade and other payables		(10,075,368)	(8,253,260)	(13,249,146)
Derivatives and other liabilities		(44,885)	(86,105)	(62,477)
		(10,120,253)	(8,339,365)	(13,311,623)
Net current assets		(2,890,081)	1,124,378	(4,858,970)
Total assets less current liabilities		7,399,934	22,836,555	6,205,345
Non-current liabilities
Loans due in over one year	15	(28,162,903)	(24,229,005)	(27,276,015)
Provisions		(2,959,976)	(2,969,400)	(2,979,956)
		(31,122,879)	(27,198,405)	(30,255,971)
Total Liabilities		(41,243,132)	(35,537,770)	(43,567,597)
Net Assets		(23,722,945)	(4,361,850)	(24,050,627)
Equity attributable to equity holders of the parent
Share capital	13	7,135,082	5,190,877	6,288,019
Share premium	14	64,748,942	64,817,662	64,961,905
Warrant reserve		12,188,032	11,153,396	11,373,966
Share option reserve		1,570,827	1,358,132	1,412,285
Foreign currency translation reserve		(3,141,836)	(2,277,812)	(3,319,797)
Retained earnings		(106,223,992)	(84,604,105)	(104,772,035)
Total Equity		(23,722,945)	(4,361,850)	(24,050,627)

The notes included below form an integral part of these financial statements.

 

Consolidated Statement of Changes in Equity

Period ended 30 June 2021

	Retained earnings US $	Share capital US $	Share premium US $	Warrant reserve US $	Share option reserve US $	Foreign currency translation reserve US $	Total equity US $
1 January 2021	(104,772,035)	6,288,019	64,961,905	11,373,966	1,417,285	(3,319,767)	(24,050,627)
Loss for the period	(1,274,027)	-	-	-	-	-	(1,274,027)
Exchange Reserve	(177,930)	-	-	-	-	177,930	-
Total comprehensive loss for the period	(1,451,957)	-	-	-	-	177,930	(1,274,027)
Warrants issued	-		(814,066)	814,066	-	-	-
Warrants exercised	-	274,803	86,122	-	-	-	360,925
Share issue	-	572,260	595,153	-	-	-	1,167,413
Transaction costs			(80,171)	-	-	-	(80,171)
Share options lapsed	-	-	-	-	-	-	-
Share-based payments	-	-	-	-	153,542	-	153,542
30 June 2021	(106,223,992)	7,135,082	64,748,943	12,188,032	1,570,827	(3,141,837)	23,722,925
1 January 2020	(78,857,006)	5,190,877	64,817,662	11,142,290	1,159,580	(2,277,812)	1,175,591
Loss for the period	(5,747,099)	-	-	-	-	-	(5,747,099)
Exchange Reserve	-	-	-	-	-	-	-
Total comprehensive loss for the period	(84,604,105)	5,190,877	64,817,662	11,142,290	1,159,580	(2,277,812)	(4,571,508)
Warrants issued	-	-	-	11,106	-	-	11,106
Share options lapsed	-	-	-	-	-	-	-
Share-based payments	-	-	-	-	198,552	-	198,552
30 June 2020	(84,604,105)	5,190,877	64,817,662	11,153,396	1,358,132	(2,277,812)	(4,361,850)
1 January 2020	(78,857,006)	5,190,877	64,817,662	11,142,290	1,159,580	(2,277,812)	1,175,591
Loss for the year	(15,267,535)	-	-	-	-	-	(15,267,535)
Discontinued operations	(3,441,230)	-	-	-	-	-	(10,724,108)
Exchange Reserve	-	-	-	-	-	(1,041,995)	(1,041,955)
Total comprehensive loss for the year	(25,991,643)	-	-	-	-	(1,041,955)	(13,472,062)
New shares issued	-	1,0971,142	467,735	-	-	-	1,565,077
Warrants	-	-	(231,676)	231,676	-	-	-
Share issue costs	-	-	(92,016)	-	-	-	(92,016)
Share options lapsed	396,935	-	-	-	(76,614)	-	-
Share-based payments	-	-	-	-	334,319	-	334,319
31 December 2020	(104,772,035)	6,288,019	64,961,906	11,373,966	1,417,285	(3,319.767)	(24,050,627)

The notes included below form an integral part of these financial statements.

 

Consolidated Statement of Cash Flows

Period ended 30 June 2021

	Unaudited 1 January 2021 30 June 2021 US $	Unaudited 1 January 2020 30 June 2020 US $	Year to 31 December 2020 US $
Cash flows from operating activities
Loss from continuing operations	(1,274,027)	(5,747,099)	(15,267,535)
Loss from discontinued operations	-	-	(10,724,108)
	(1,274,027)	(5,747,099)	(25,991,643)
Adjustments for:
Depreciation and depletion of property, plant and equipment	35,887	102,442	182,211
Depreciation and depletion of intangible assets	738,412	982,102	1,874,810
(Gain)/Loss on disposal of property, plant and equipment	-	-	10,822
(Gain)/Loss on disposal on Right of use	-	(66,473)	-
Impairment of intangible assets and goodwill   Impairment of intangible assets and goodwill	-	-  -	10,383,461
Share-based payments	153,542	209,658	334,319
Right to use liability	-	-	(64,180)
Financial income	(3,140,024)	(1,845)	(7,142)
Financial expense	3,287,229	728,821	10,174,047
Exchange difference	(1,656,272)	-	(2,265,180)
Derivative financial gain	(17,575)	(642,678)	(666,306)
	(598,801)	1,312,027	19,956,865
(Increase) in inventory	103,215	(191,382)	(120,386)
Decrease/(Increase) in other receivables	1,700,723	988,467	311,275
(Decrease)/increase in trade and other payables	(1,020,415)	3,354,669	5,844,002
Cash used in operations	783,523	5,463,781	(6,034,891)
Net cash used in operating activities	(1,089,305)	(283,318)	112
Cash flows from investing activities
Purchase of intangible assets	-	(248,092)	(470,637)
Purchase of property, plant and equipment	-	-	(1,644,516)
Net cash used in investing activities	-	(248,092)	(2,115,153)
Cash flows from financing activities
Interest received	166,820	1,845	7,142
Interest paid	(208,900)	(1,746)	-
Bank Fees and other finance cost	(63,136)	-	(185,520)
Repayment of right of use liability	-	(2,293)	-
Issue of share capital	1,167,413	-	1,565,077
Share issue costs	(80,171)	-	(92,016)
Proceeds from Warrant exercise	360,925	-	-
Net cash from financing activities	1,342,951	(2,194)	1,290,682
Net (decrease)/increase in cash and cash equivalents	253,646	(533,604)	(824,360)
Cash and cash equivalents at the beginning of the period	682,159	1,698,012	1,698,012
Foreign Excahnge gains(losses) on cash and cash equivalents	9,683	-	(191,439)
Cash and cash equivalents at the end of the period	945,488	1,164,408	682,159

The notes included below form an integral part of these financial statements.

 

Notes to the Financial Statements

Period ended 30 June 2021

1. Accounting Policies 

General Information 

These financial statements are for Echo Energy plc ("the Company") and subsidiary undertakings ("the Group"). The Company is registered, and domiciled, in England and Wales and incorporated under the Companies Act 2006.   

Basis of Preparation   

The condensed and consolidated interim financial statements for the period from 1 January 2021 to 30 June 2021 have been prepared in accordance with International Accounting Standards ("IAS") 34 Interim Financial Reporting, and on the going concern basis. They are in accordance with the accounting policies set out in the statutory accounts for the year ended 31 December 2020 and are expected to be applied for the year ended 31 December 2021.

The comparatives shown are for the period 1 January 2020 to 30 June 2021, and 31 December 2020 and do not constitute statutory accounts, as defined in section 435 of the Companies Act 2006, but are based on the statutory financial statements for the year ended 31 December 2020.

A copy of the Company's statutory accounts for the year ended 31 December 2020 has been delivered to the Registrar of Companies; the accounts are available to download from the Company website at www.echoenergyplc.com.

Going Concern 

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman and Chief Executive Officer's Statement  above. The financial position of the Group, its cash flows and liquidity position are set out in these Condensed Interim Financial Statements. 

The directors have performed a robust assessment, including consideration of the principal risks faced by the Group and taking into account the ongoing impact of the global Covid-19 pandemic on the macroeconomic situation and any potential impact to operations.

The financial information has been prepared assuming the Group will continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations. Whilst rigorously pursuing cost control and value maximising strategies, the Group recognises that in order to pursue organic and inorganic growth opportunities and fund on-going operations it will require additional funding. This funding may be sourced through debt finance, joint venture equity or share issues.

The directors have formed a judgement based on Echo's proven success in raising capital and a review of the strategic options available to the Group, that the going concern basis should be adopted in preparing the Condensed Interim Consolidated Financial Statements.  

Estimates

The preparation of the interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this condensed interim financial information, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to consolidated financial statements for the year ended 31 December 2020. The key sources of uncertainty in estimates that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities, within the next financial year, are the Group's going concern assessment.

Revenue Recognition

Revenue comprises the invoice value of goods and services supplied by the Group, net of value added taxes and trade discounts. Revenue is recognised in the case of oil and gas sales when goods are delivered and title has passed to the customer. This generally occurs when the product is physically transferred into a pipeline or vessel. Echo recognised revenue in accordance with IFRS 15. We have a contractual arrangement with our joint venture partner who markets gas and crude oil on our behalf. Gas is transferred via a metred pipeline into the regional gas transportation system, which is part of the national transportation system, control of the gas is transferred at the point at which the gas enters this network, this is the point at which gas revenue is recognised. Gas prices vary from month to month based on seasonal demand from customer segments and production in the market as a whole. Our partner agrees pricing with their portfolio of gas clients based on agreed pricing mechanisms in multiple contracts. Some pricing is regulated by government such as domestic supply. Echo receive a monthly average of gas prices attained. Oil shipments are priced in advance of a cargo and revenue is recognised at the point at which cargoes are loaded onto a shipping vessel at termina

2. Business Segments 

The Group has adopted IFRS 8 Operating Segments. Per IFRS 8, operating segments are regularly reviewed and used by the board of directors being the chief operating decision maker for strategic decision-making and resources allocation, in order to allocate resources to the segment and assess its performance.

The Group's reportable operating segments are as follows: 

  a.  Parent Company               

                b.  Eastern Austral Basin 

                c.           Tapi Aike

                d.            Bolivia

Performance is based on assessing progress made on projects and the management of resources used. Segment assets and liabilities are presented inclusive of inter-segment balances. Reportable segments are based around licence activity, although the reportable segments are reflected in legal entities, certain corporate costs collate data across legal entities and the segmental analysis reflects this.

Information regarding each of the operations of each reportable segment within continuing operations is included in the following table.

All revenue, which represents turnover, arises within Argentina and relates to external parties:

	Parent Company	Santa Cruz Sur	Tapi Aike	Bolivia	Total
	US $	US $	US $	US $	US $
Period to 30 June 2021
Revenues	-	5,891,413	-	-	5,891,413
Cost of sales	-	(5,497,993)	-	-	(5,497,993)
Exploration expense	(45,807)	-	-	-	(45,807)
Administration expense	(1,332,349)	(113,839)	(48,928)	(115,043)	(1,610,158)
Impairment of intangible assets	-	-	-	-	-
Impairment of property, plant and equipment	-	-	-	-	-
Financial income	2,898,300	77,101	164,616		3,140,024
Financial expense	(1,823,398)	(898,236)	(467,375)	(61)	(3,186,081)
Derivative Financial Expense	17,592	-	-	-	17,575
Income tax	-	-	-	-	-
Loss before tax	(285,662)	(541,554)	(351,687)	(115,104)	(1,262,545)
Non-current assets	28,792,797	4,740,757	3,362,308	(453,174)	36,442,688
Assets	28,940,599	9,214,984	5,947,869	(413,628)	43,689,824
Liabilities	(28,816,764)	(7,943,328)	(4,421,895)	(81,125)	(41,263,112)

	Parent Company US $	Santa Cruz Sur US $	Tapi Aike US $	Bolivia US $	Consolidation US $	Total US $
Period to 30 June 2020
Revenues	-	5,656,740	-	-	-	5,656,740
Cost of sales	-	(7,656,740)	-	-	-	(7,287,740)
Exploration expense	(68,554)	-	-	-	-	(68,554)
Administration expense	(1,300,419)	(120,701)	56,538	(115,554)	-	(1,480,136)
Impairment of intangible assets	-	-	-	-	-	-
Impairment of property, plant and equipment	-	-	-	-	-	-
Financial income	1,847	-	-	-	-	1,847
Financial expense	(2,340,434)	(872,069)	(1,015)	1,078	-	(3,212.440)
~Depreciation	642,678	-	-	-	-	642.678
Income tax	-	-	-	-	-	-
Loss before tax	(3,064,882)	(2,632,263)	55,523	(114,476)	-	(5,747,099)
Non-current assets	35,265,014	6,822,530	5,935,643	(271,171)	(26,032,839)	21,712,177
Assets	45,181,992	(12,916,982)	(656,675)	(240,370)	(26,026,010)	31,175,919
Liabilities	(23,073,545)	(12,406,577)	(2,314)	(49,335)	-	(35,537,770)

Consolidation adjustments in respect of assets relate to the impairment of intercompany assets .

~Depreciation is included in administration expenses

The geographical split of non-current assets arises as follows:

	United Kingdom US $	South America US $	Total US $
30 June 2021
Property, plant and equipment	2,457	2,514,348	2,516,805
Other intangible assets	326,869	7,446,341	7,773,210
30 June 2020
Property, plant and equipment	19,025	967,258	986,283
Other intangible assets	-	20,725,894	20,725,894

3. Revenue

	Unaudited 1 January 2021 - 30 June 2021 US $	Unaudited 1 January 2020 - 30 June 2020 US $	Year to 31 December 2020 Audited -Continued operations  US $
Oil revenue	2,024,421	2,090,922	2,784,248
Gas revenue Other Income	3,833,857 33,135	3,565,818 -	8,279,416 62,856
Total Revenue	5,891,413	5,656,740	11,126,520

4. Cost of Sales

	Unaudited 1 January 2021 - 30 June 2021 US $	Unaudited 1 January 2020 - 30 June 2020 US $	Year to 31 December 2020 US $
Production costs	3,794,486	5,723,033	10,021,578
Selling and distribution costs	863,065	764,918	1,567,963
Movement in stock of crude oil	72,239	(191,382)	(89,410)
Depletion	768,203	990,665	1,936,879
Total Costs	5,497,993	7,287,234	13,437,010

5. Finance Income

	Period to 30 June 2021 US $	Period to 30 June 2020 US$	Year to 31 December 2020 US $
Interest income	241,716	1,847	7,142
Net foreign exchange gains	2,898,308	-	-
Total	3,140,024	1,847	7,142

The Interest income principally relates to interest gained on Argentine VAT balances owed and paid to the Group in May 2021.

 6. Financial Expense

	Period to 30 June 2021 US $	Period to 30 June 2020 US$	Year to 31 December 2020 US $
Interest payable	1,299,079	1,191,065	1,991,535
Unwinding of discount on long term loan	404,081	1,131,249	2,936,831
Amortisation of loan fees	119,526	150,199	614,913
Warrant Valuation expense	-	11,106	-
Accretion of right of use liabilities	-	2,293	2,293
Unwinding of abandonment provision	19,980	-	39,956
Finance cost of holding bonds	-	-	11,971
Foreign Exchange Losses	1,242,035	660,018	4,409,732
Bank fees and overseas transaction taxes	202,528	66,510	166,816
Total	3,287,229	3,212,440	10,174,047

7.Derivative Financial Gain/Loss

	Period to 30 June 2021 US $	Period to 30 June 2020 US $	Year to 31 December 2021 US $
Fair value gain	17,575	642,678	666, 306
Total	17,575	642,678	666, 306

Represents fair value gain on valuation of derivatives instruments at period end.

8.Taxation

The Group has tax losses available to be carried forward in certain subsidiaries and the parent company. Due to uncertainty around timing of the Group's projects, management have not considered it appropriate to anticipate an asset value for them. No tax charge has arisen during the six month period to 30 June 2021, or in the six months period to June 2020, or the year to 31 December 2020. 

9. Loss Per Share

The calculation of basic and diluted loss per share at 30 June 2021 was based on the loss attributable to ordinary shareholders. The weighted average number of ordinary shares outstanding during the period ending 30 June 2021 and the effect of the potentially dilutive ordinary shares to be issued are shown below.

	Period to 30 June 2021	Period to 30 June 2020	Year to 31 December 2020
Net loss for the year (US $)	(1,294,027)	(5,747,099)	(25,991,664)
Basic weighted average ordinary shares in issue during the year	1,236,231,219	711,717,587	768,598,277
Diluted weighted average ordinary shares in issue during the year	1,236,231,219	711,717,587	768,598,277
Loss per share (cents)
Basic	(0.10)	(0.81)	(3.38)
Diluted	(0.10)	(0.81)	(3.38)

In accordance with IAS 33 and as the entity is loss making, including potentially dilutive share options in the calculation would be anti-dilutive. Deferred shares have been excluded from the calculation of loss per share due to their nature.

10. Property, Plant and Equipment

	PPE - O&G Properties US $	CDL Licence Areas Discontinued US $	Fixtures & Fittings US $	Property Right-of-Use Assets US $	Total US $
30 JUNE 2021
Cost
1 January 2021	2,621,921	-	97,254	-	2,719,175
Additions		-	-	-	-
Disposals		-	-	-	-
30 June 2021	2,621,921	-	97,254	-	2,719,175
Depreciation
1 January 2020	79,941	-	86,542	-	166,483
Charge for the period	29,790	-	6,097	-	35,887
Disposals	-	-	-	-	-
30 June 2021	109,731	-	92,639	-	202,370
Carrying amount
30 June 2021	2,512,190		4,615	-	2,516,805
30 JUNE 2020
Cost
1 January 2020	979,164	-	131,122	309,804	1,420,090
Additions	-	-	35	-	35
Disposals	-	-	(33,923)	(309,804)	(343,727)
30 June 2020	979,164	-	97,234	-	1,076,398
Depreciation
1 January 2019	3,338	-	91,366	224,176	318,880
Charge for the period	8,568	-	19,828	74,046	102,442
Disposals	-	-	(32,985)	(298,222)	(331,207)
30 June 2020	11,906	-	78,209	-	90,115
Carrying amount
30 June 2020	967,258	-	19,025	-	986,283
31 DECEMBER 2020
Cost
1 January 2020	979,164	-	131,122	309,804	1,420,090
Additions	1,644,460	-	56	-	1,644,516
Disposals	(1,703)	-	(33,923)	(309,804)	(345,430)
31 December 2020	2,621,921	-	97,255	-	2,719,176
Depreciation
1 January 2020	3,338	-	91,366	224,176	318,880
Exchange differences	-	-	-	-	-
Charge for the year	76,603	-	19,980	85,628	182,211
Impairment charge	-	-	-	-	-
Disposals	-	-	(24,804)	(309,804)	(334,608)
31 December 2020	79,941	-	86,542	-	166,483
Carrying amount
31 December 2020	2,541,980		10,713		2,552,693
31 December 2019	975,826	-	39,756	85,628	1,101,210

11. Other Intangible Assets 

Exploration and Evaluation

	Argentina Exploration & Evaluation US $	CDL Licence Areas Discontinued US $	Ksar Hadada Exploration Acreage US $	Total US $
30 June 2021
Cost
1 January 2021	10,756,306	-	-	10,756,306
Disposals	-	-	-
Decommissioning assets	-	-	-
Additions	-	-	-
30 June 2021	10.756,306	-	-	10,756,306
Impairment
1 January 2020	2,244,684	-	-	2,244,684
Depletion	415,912	-	-	415,912
Depreciation decommissioning assets	322,500	-	-	322,500
Impairment charge for the period	-	-	-	-
30 June 2021	2,983,096	-	-	2,983,096
Carrying amount
30 June 2021	7,773,210	-	-	7,773,210
31 December 2020	8,511,622			8,511,622
30 JUNE 2020
Cost
1 January 2020	20,943,460	-	-	20,943,460
Discontinued operations	29,401	-	-	29,401
Additions	1,105,009	-	-	1,105,009
Transfer to PP&E
30 June 2020	22,077,870	-	-	22,077,870
Impairment
1 January 2020	369,874	-	-	369,874
Discontinued operations	982,102			982,102
Impairment charge for the period
30 June 2020	1,351,976	-	-	1,351,976
Carrying amount
30 June 2020	20,725,894	-	-	20,725,894
31 DECEMBER 2020	20,573,587	-	-	20,573,587
Cost
1 January 2020	10,802,524	10,140,936	-	20,943,460
Additions	228,112	242,525	-	470,6537
Disposals	-	(10,383,461)	-	(10,383,341)
Decommissioning assets	-	-	-	-
Transfers	(274,330)	-	-	(274,330)
31 December 2020	10,756,306	-	-	10,756,306
Impairment
1 January 2020	36,874	-	-	369,874
Disposals	-	(10,383,461)	-	10,383,461)
Depletion	1,874,810	-	-	1,874,810
Impairment charge for the year	-	10,383,461	-	10,383,461
31 December 2019	2,244,686	-	-	2,244,686
Carrying amount
31 December 2020	8,511,622	-	-	8,511,622
31 December 2019	20,575,586	-	-	20,573,586

On 22 December 2020 the Company announced that it had allowed the lapse of the option to re enter the Tapi aike asset. This resulted in Echo withdrawing its interest and liabilities under the Tapi Aike concessions prior to the drilling of the next exploration well in the Tapi Aike Western Cube.

12.Cash and Cash Equivalents

	Six months to 30 June 2021	Six months to 30 June 2020	31 December 2020
	US $	US $	US $
Cash held by joint venture partners	190,974	194,973	24,749
Cash and cash equivalents	754,514	969,435	654,680
Total	945,488	1,164,408	682,159

Echo has advanced cash to its joint venture partner. The equity share of the balance held is recognised

13. Share Capital

	Six months to 30 June 2021	Six months to 30 June 2020	Year to 31 December 2020
	US $	US $	US $
Issued, Called Up and Fully Paid
1,298,813 0.32¢ (June 2020: 711,717,587 0.32¢) ordinary shares
1 January 2021	6,288,019	5,190,877	5,190,877
Equity shares issued	847,063	-	745,878
30 June / 31 December	7,135,082	5,190,877	6,288,019

The holders of 0.32c (0.25p) ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the Company.

During the six month period to 30 June 2021, 258,762,165 share were issued.

14. Share Premium Account

	Six months to	Six months to	Year to
	30 June 2021 US $	30 June 2020 US $	31 December 2020 US $
1 January	64,961,905	64,817,662	68,817,662
Premium arising on issue of equity shares	595,153	-	467,934
Premium arising on exercise of warrants	86,122
Warrants lapsed or exercised	(814,066)	-	(231,675)
Transaction costs	(80,171)	-	(92,016)
30 June	64,748,942	64,817,662	64,961,905

15. Loans

			30 June 2021 US $	30 June 2020 US$	31 December 2020 US $
Five-year secured bonds Additional net funding			(20,907,802)   (5,940,825)	(18,429,737) -	(22,167,419) (5,766,544)
Other loans			(1,452,341)	(5,799,268)	(1,640,693)
Total			(28,300,968)	(24,229,005)	(29,574,656)
	Balance as at 31 December 2020 US $	Amortised finance charges less cash interest paid US $	Repayment of principle US$	Exchange adjustments US $	30 June 2021 US$
€20 million five-year secured bonds	22,836,146	1,246,109		(2,583,675)	21,498,580
€5 million Lombard Odier debt Other loans	5,987,801 1,640,692	311,220 145,831	(208,900)	(178,515) (125,282)	6,120,506 1,452,341
Loan fees	(668,726)	77,948		-	(590,778)
Incremental loan fees	(221,257)	41,576		-	(179,681)
Total	29,574,656	1,822,684	(208,900)	(2,887,472)	28,300,968

US $ 138,065 of the total loan balance is shown in current liabilities and US $28,162,903 is shown non-current liabilities.

Bond restructure

On 22 February 2021, Echo announced further to the Company's announcement of 1 December 2020, its proposals in respect of a restructuring of the Company's Bonds, it proposed to:

• Extend the maturity of the Bonds by three years to 15 May 2025 (the "Maturity Date"); and

• Remove all cash interest payments on the Notes prior to the Maturity Date.

On approval, all interest on the Bonds accruing from 31 December 2019 shall be paid in cash on the Maturity Date save that Noteholders will be provided with the ability, from 30 September 2021, to elect to receive Bond interest payments in respect of the immediately preceding quarter in new ordinary Shares in the Company ("Elections"), subject inter alia to the Company having the required share issuance authorities in place from time to time to satisfy elections and to Noteholders holding at least 50 per cent of the Bonds having made Elections in respect of the relevant quarter. Any new ordinary shares issued as a result of elections would be issued at an effective issue price equal to the volume weighted average price of an Echo ordinary share for the 10 Business Days before the relevant interest conversion date.

As part of the Proposals, the Company agreed that it will not, without the prior consent of Noteholders, drill an exploration well with a budgeted cost to the Company of in excess of EUR 5.0 million for so long as the Bonds are outstanding and that it will not, in the last 18 months prior to the Maturity Date, make an acquisition of an interest in an oil and gas property, lease or licence if the cash consideration for such acquisition exceeds EUR 10.0 million.

A payment of EUR 100,000, payable to Bondholders, was satisfied by the issue of new ordinary shares in the Company at an issue price equal to the average mid-market closing price per Echo ordinary share for the five days ending, and including, 18 February 2021.

Subsequently on 30 March 2021, a requisite majority of Bondholders approved the Debt restructuring proposals. Echo issued a total of 11,473,929 new ordinary shares in the Company (representing c.0.9% of the Company's current issued ordinary share capital) to Bondholders.

16. Subsequent Events

Operational Update

On 26 August 2021, following installation of the pipeline required to bring back online the liquids production which was shut in April 2020, the infrastructure was successfully commissioned for operation and shut-in wells are being brought online.  This follows an upgrade of the electrical infrastructure, which was designed to support the first tranche of production from the Campo Molino and Chorillos oil fields to provide sufficient power to support sustained production from the associated ten wells.

To date, the Campo Molino oil field has been brought back online with four of the shut-in wells now back in operation and producing from the Springhill reservoir. This first tranche of restored production will increase the number of active producing oil wells at Santa Cruz Sur to 18. 

As of 23 August 2021, the recently reactivated wells have contributed to an almost 50% increase in total liquids production at Santa Cruz Sur compared to the period immediately prior to this (281 bopd gross, 197 bopd net to Echo - during the period 1 -17 August 2021). This represents an increase of 137 bopd gross, 95 bopd net to Echo and work continues to bring the remainder of the first tranche of shut-in production back online. The production levels from the initial reactivated wells indicate that the shut-in period has not had a detrimental impact on reservoir behaviour in the Campo Molino oil field. Prior to shut-in, the combined gross production from the ten oil wells was approximately 138 bopd gross, 96 bopd net to Echo, approximately the same level now being achieved from the initial four wells, with the associated upgraded infrastructure.  

 

END

 

 

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