LOI for New Rio Salado TEA and Update re Sales
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$1 million.
Fiona MacAulay, Chief Executive Officer of Echo, commented:
We are delighted to have signed an LOI relating to a new Technical Evaluation Agreement which would secure a further period of time to evaluate the prospectivity of this licence area, incorporating additional 2D seismic data not previously available. During the next 12 months the Company will be in a position both to extend its understanding of the deeper structure and also to incorporate the results of the two important wells currently drilling in the area.
We are also very pleased that the strong market for oil exports continues in the region and that receipts in US$ are particularly positive for further reducing the exposure of the Company to the current volatility of the Argentinian Peso.
For further information please contact:
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Echo Energy plc Fiona MacAulay, CEO
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Smith & Williamson (Nominated Adviser) David Jones Ben Jeynes Katy Birkin
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+44 (0)20 7131 4000 |
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Hannam & Partners (Joint Corporate Broker) Giles Fitzpatrick Andrew Chubb Ernest Bell
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+44 (0)20 7907 8500
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Shore Capital (Joint Corporate Broker) Jerry Keen
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+44 (0)20 7408 4090 |
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Vigo Communications (PR Adviser) Patrick d'Ancona Chris McMahon Kate Rogucheva
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+44 (0)20 7390 0230 |
The information contained in this announcement has been reviewed by Echo Energy's Chief Operating Officer, Mr Geoffrey Probert MEng, Member of Institute of Materials, Minerals and Mining. Mmbtu means billion 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.
Note
The assignment of Echo´s participation in the Fraccíon C, Fraccíon D, Laguna Los Capones and Tapi Aike 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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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