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Echo Energy PLC (ECHO)

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Wednesday 12 September, 2018

Echo Energy PLC

Interim Results

RNS Number : 4772A
Echo Energy PLC
12 September 2018
 

12 September 2018

 

Echo Energy plc

("Echo" or the "Company")

 

Interim Results

 

Echo Energy plc, the Latin American focused upstream oil and gas company, is pleased to announce its unaudited interim results for the six months ended 30 June 2018.

 

Highlights

 

·      Completion of Argentinian farm-in and re-admission to AIM in January 2018

 

·      3 well workover campaign at Fraccion D completed ahead of time and under budget during the period

 

·      4 well back-to-back exploration campaign across the licences on independent structures commenced in May 2018

 

·      Gas discovery and extended well test on the CSo-85 well on the Eastern flank of the Cañadon Salto Field at Fraccion D

 

·      H1 2018 oil sales of US$2.1 million and gas sales of US$2.1 million

 

·      Cash balances of £26.1 million as at 30 June 2018

 

 For further information please contact:

Echo Energy plc

Fiona MacAulay, CEO

 

 

[email protected]

 

Smith & Williamson (Nominated Adviser)

David Jones

Ben Jeynes

Katy Birkin

 

+44 (0)20 7131 4000

Hannam & Partners (Joint Corporate Broker)

Giles Fitzpatrick

Andrew Chubb

Ernest Bell

 

+44 (0)20 7907 8500

 

Shore Capital (Joint Corporate Broker)

Jerry Keen

 

+44 (0)20 7408 4090

Vigo Communications (PR Adviser)

Patrick d'Ancona

Chris McMahon

Kate Rogucheva

 

+44 (0)20 7390 0230

 

Chief Executive Officer's Statement

 

"Our bold growth strategy in Latin America has provided us with access to a balanced portfolio in the region where we are focused on multiple exploration opportunities, including the high impact Tapi Aike licence, and have the potential to add production, cash flow and additional reserves to the portfolio."

 

The first six months of this year have been incredibly busy for your company, and post period this level of activity has continued. In January the Company was readmitted to trading on AIM following completion of the farm-in agreement with Compañía General de Combustibles S.A. ("CGC") which saw the company take a 50% interest in a number of assets in Argentina. Our work on these licences, both technical and operational, has formed the bulk of our activity year to date.

 

Starting in April this year the company executed a three well workover campaign on its Fracción D licence. This activity was completed ahead of time, under budget and with adherence to the highest standards of health and safety. The highlight of the campaign was the gas discovery and subsequent extended well test on the CSo-85 well on the eastern flank of the Cañadon Salto Field for which we are currently developing plans for a commercial gas project.

 

The workover activity will also result in an increase in oil production across the fields and will contribute to our oil sales in Argentina, with ongoing oil sales delivering a combined US$2.1 million to the Company in H1 2018 alongside gas sales of US$2.1 million.

 

A subsequent exploration campaign comprising the drilling of four back to back exploration wells on independent structures began in May 2018, producing positive results from the Tobifera formation across the licences, but the company notes caution should be applied prior to testing of the well due to the complex nature and petrophysics of the volcaniclastic reservoir. The company is still in the process of evaluating the considerable volume of data generated for assimilation into the regional model.

 

Post period the ELM-1004 well which displayed positive readings during the drilling phase yielded dry gas to surface on initial testing and a well stimulation programme to improve the rate is now being developed, while the testing of the EMS-1001 well is due to commence later this year. 

 

In May, we announced the completion of an £8.5 million placing to fund an extended seismic campaign on the Tapi Aike licence. We moved rapidly to secure this additional funding as a window of opportunity had opened in which we were able to secure pricing for a total of 2,000 km2 of 3D seismic acquisition across both the Tapi Aike and Fracción C, Fracción D and Laguna De Los Capones ("CDL") licences, with a c.US$7 million saving to the previously estimated total for Tapi Aike alone. This saving is broadly in line with the gross cost of an exploration well on Tapi Aike and the early commencement of seismic acquisition will accelerate the likely spud date for a well on this extremely exciting frontier scale acreage.

 

Looking ahead, I expect the level of activity seen in the first half of the year to continue throughout 2018. The test rig is currently in the CDL licence area completing the testing programme for the wells drilled during the exploration campaign and is also engaged in a pilot project of workovers in the Cañadon Salto Field to reinstate or increase production in four selected wells.

 

We are currently preparing for the 3D seismic shoot on Tapi Aike which we expect to commence this year. The seismic acquisition programme should take approximately 4-5 months, with processed results expected in H2 2019.

 

Once this new data has been integrated into our current dataset, and the identification and hi-grading of prospects has taken place, we would be anticipating to be drill ready at Tapi Aike by late 2019.

 

I look forward to updating you on our progress throughout the remainder of 2018 and would like to thank all of our shareholders for their continued support.

 

FIONA MACAULAY

CHIEF EXECUTIVE OFFICER

 

condensed statement of Comprehensive income

SIX MONTHS ENDED 30 JUNE 2018

 

 

Notes

Unaudited

1 January 2018 to

30 June

2018

£

Unaudited

1 January

 2017 to

30 June

2017

£

Audited

1 January

 2017 to

31 December 2017

£

Continuing operations

 

 

 

 

Revenues

 

  2,885,949 

 -

 -

Cost of sales

 

(2,700,470)

 -

 -

Gross profit

 

  185,479 

 -

 -

Exploration expenses

 

(431,642)

 -

(432,486)

Administrative expenses

 

(2,513,377)

(1,287,580)

(5,322,458)

Gain on disposal of foreign subsidiary

 

  394,253 

 -

 -

Operating loss

 

(2,365,287)

(1,287,580)

(5,754,944)

Financial income

 

  14,536 

  369 

  2,596 

Financial expense

3

(2,000,109)

(364,288)

(1,687,199)

Loss before tax

 

(4,350,860)

(1,651,499)

(7,439,547)

Taxation

4

 -

 -

 -

Loss from continuing operations

 

(4,350,860)

(1,651,499)

(7,439,547)

Discontinued operations

 

 

 

 

Gain/(loss) after taxation for the period from discontinued operations

 

 -

(24,759)

  25,991 

Loss for the year

 

(4,350,860)

(1,676,258)

(7,413,556)

Other comprehensive income:

 

 

 

 

Other comprehensive income to be reclassified to profit

 

 

 

 

or loss in subsequent periods (net of tax)

 

 

 

 

Exchange difference on translating foreign operations

 

83,450

  2,121 

(91,653)

Total comprehensive loss for the PERIOD

 

(4,267,410)

(1,674,137)

(7,505,209)

Loss attributable to:

 

 

 

 

Owners of the parent

 

(4,350,860)

(1,676,258)

(7,413,556)

Total comprehensive loss attributable to:

 

 

 

 

Owners of the parent

 

(4,267,410)

(1,674,137)

(7,505,209)

Loss per share (pence)

5

 

 

 

Basic

 

(1.0)

(0.9)

(2.7)

Diluted

 

(1.0)

(0.9)

(2.7)

Loss per share (pence) for continuing operations

 

 

 

 

Basic

 

(1.0)

(0.9)

(2.7)

Diluted

 

(1.0)

(0.9)

(2.7)

 

condensed statement of Financial position

AS AT 30 JUNE 2018

 

Notes

Unaudited

1 January

2018 to

30 June

2018

£

Unaudited

1 January

2017 to

30 June

2017

£

Audited

1 January

2017 to

31 December 2017

£

Non-current assets

 

 

 

 

Property, plant and equipment

6

  266,259 

  1,957 

  285,145 

PPE - O&G Properties

 

  - 

  432,486 

-

Other Intangible assets

7

  7,368,086 

 -

  1,885,984 

 

 

  7,634,345 

  434,443 

  2,171,129 

Current assets

 

 

 

 

Inventories

 

  739,976 

 -

 -

Other receivables

 

  2,579,660 

  118,239 

  1,055,336 

Cash and cash equivalents

8

  26,133,284 

  25,545,780 

  19,719,072 

 

 

  29,452,920 

  25,664,019 

  20,774,408 

Assets held for distribution

 

  - 

  91,808 

  54,777 

 

 

  29,452,920 

  25,755,827 

  20,829,185 

Current liabilities

 

 

 

 

Trade and other payables

 

(6,501,319)

(479,890)

(2,500,372)

Liabilities directly associated with the assets held for distribution

 

-

(11,864)

(28,391)

 

 

(6,501,319)

(491,754)

(2,528,763)

Net current assets

 

  22,951,601 

  25,264,073 

  18,300,422 

Non-current liabilities

 

 

 

 

Loans due in over one year

12

(11,640,162)

(10,245,639)

(11,412,361)

Right of use liability

 

(101,290)

 -

(166,624)

 

 

(11,741,452)

(10,245,639)

(11,578,985)

Total liabilities

 

(18,242,771)

(10,737,393)

(14,107,748)

Net assets

 

  18,844,494 

  15,452,877 

  8,892,566 

Equity attributable to equity holders of the parent

 

 

 

 

Share capital

9

  3,388,585 

  3,104,919 

  3,112,586 

Share premium

10

  38,358,043 

  25,439,364 

  24,636,445 

Shares to be issued

 

 -

  277,468 

 -

Share warrant reserve

 

  8,557,571 

  103,058 

  8,574,827 

Share option reserve

 

  1,278,902 

  8,730,575 

  669,456 

Foreign currency translation reserve

 

  69,224 

  473,801 

  380,027 

Retained earnings

 

(32,807,831)

(22,676,308)

(28,480,775)

Total equity

 

  18,844,494 

  15,452,877 

  8,892,566

 

condensed statement of Changes in equity

SIX MONTHS ENDED 30 JUNE 2018

 

Retained earnings

£  

Share

capital

£  

Share premium

£  

Shares to be issued

£  

Warrant reserve

£  

Share option reserve

£  

Foreign currency translation reserve

£  

Total

equity

£

Six months to
30 June 2018

 

 

 

 

 

 

 

 

1 January 2018

(28,480,775)

  3,112,586 

  24,636,445 

 -

  8,574,827 

  669,456 

  380,027

  8,892,566 

Loss for the year

(4,350,860)

 -

 -

 -

 -

 -

 -

(4,350,860)

Exchange differences

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

83,450

 

83,450

Total comprehensive loss for the year

(4,350,860)

 -

 -

 -

 -

 -

83,450

(4,267,410)

Unwind discontinued operations reserve

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

(394,253)

 

(394,253)

New shares issued

 -

  268,943 

  14,646,932 

 -

 -

 -

 -

  14,915,875 

Warrants exercised

  10,062

  2,681 

  99,262 

 

(17,256)

 -

 -

  94,749 

Share Options exercised

 

 -

 

  4,375 

 

  24,063 

 

 -

 

 -

 

 -

 

 -

 

  28,438 

Share issue costs

 -

 -

(1,048,659)

 -

 -

 -

 -

(1,048,659)

Share options lapsed

  13,742 

 -

 -

 -

 -

(13,742)

 -

 -

Share-based payments

 

 -

 

 -

 

 -

 

 -

 

 -

 

  623,188 

 

 -

 

  623,188 

30 June 2018

(32,807,831)

  3,388,585 

  38,358,043 

 -

  8,557,571 

  1,278,902 

  69,224 

  18,884,494 

Six months to
30 June 2017

 

 

 

 

 

 

 

 

1 January 2017

(21,088,479)

  2,430,612 

  17,621,763 

  277,468 

  714,977 

  85,515 

  471,680 

  513,536 

Loss for the year

(1,676,258)

 -

 -

 -

 -

 -

 -

(1,676,258)

Exchange differences

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

  2,121 

 

 2,121 

Total comprehensive loss for the year

(1,676,258)

 -

 -

 -

 -

 -

  2,121 

(1,674,137)

New shares issued

 -

  674,307 

  7,506,397 

 -

 -

 -

 -

  8,180,704 

New share warrants issued

 

 -

 

 -

 

 -

 

 -

 

  8,448,812 

 

 -

 

 -

 

  8,448,812 

Warrants exercised

 -

 -

  412,524 

 -

(412,524)

 -

 -

 -

Warrants lapsed

  20,690 

 -

 -

 -

(20,690)

 -

 -

 -

Share issue costs

 -

 -

(101,320)

 -

 -

 -

 -

(101,320)

Share options lapsed

  67,739 

 -

 -

 -

 -

(67,739)

 -

 -

Share-based payments

 

-

 

 -

 

 -

 

 -

 

 -

 

  85,282 

 

 -

 

  85,282 

30 June 2017

(22,676,308)

  3,104,919 

  25,439,364 

  277,468 

  8,730,575 

  103,058 

  473,801 

  15,452,877 

Year to 31 December 2017

 

 

 

 

 

 

 

 

1 January 2017

(21,088,479)

  2,430,612 

  17,621,763 

  277,468 

  714,977 

  85,515 

  471,680 

  513,536 

Loss for the year

(7,413,556)

 -

 -

 -

 -

 -

 -

(7,413,556)

Exchange differences

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

(91,653)

 

(91,653)

Total comprehensive loss for the year

(7,413,556)

 -

 -

 -

 -

 -

(91,653)

(7,505,209)

New shares issued

 -

  681,974 

  8,116,002 

 -

 -

 -

 -

  8,797,976 

New share warrants issued

 

 -

 

 -

 

 -

 

 -

 

  7,859,850 

 

-

 

 -

 

  7,859,850 

Share issue costs

 -

 -

(1,101,320)

 -

 -

 -

 -

(1,101,320)

Share options lapsed

  47,565 

 -

 -

 -

 -

(47,565)

 -

 -

Share-based payments

 

(26,305)

 

 -

 

 -

 

(277,468)

 

 -

 

  631,506 

 

 -

 

  327,733 

31 December 2017

(28,480,775)

  3,112,586 

  24,636,445 

 -

  8,574,827 

  669,456 

  380,027 

  8,892,566 

 

The Foreign Currency Translation Reserve relating to the discontinued Italian operations has been unwound in the current period £394,253.

 

Condensed Consolidated Cash Flow Statement

SIX MONTHS ENDED 30 JUNE 2018

 

Unaudited

1 January

2018 to

30 June

2018

£

Unaudited

1 January

2017 to

30 June

2017

£

Audited

1 January

2017 to

31 December 2017

£

Cash flows from operating activities

 

 

 

Loss from continuing operations

(4,350,860)

(1,651,499)

(7,439,547)

Loss from discontinued operations

 -

(24,759)

  25,991 

 

(4,350,860)

(1,676,258)

(7,413,556)

Adjustments for:

 

 

 

 Depreciation of property, plant and equipment

  34,641 

  1,690 

  34,066 

 Loss on disposal of property, plant and equipment

(29,529)

 -

 -

 Impairment of intangible assets and goodwill

 -

 -

  432,486 

 Share-based payments

  623,188 

  85,282 

  672,510 

 Interest income

(14,536)

(369)

(2,596)

 Interest expense

  1,441,010 

  364,288 

  1,939,485 

 

(2,296,086)

(1,225,367)

(4,337,605)

Decrease in inventories

 -

 -

 

(Increase)/decrease in other receivables

(1,469,547)

  116,978 

(771,367)

(Increase)/decrease in inventory

(739,976)

 -

 -

Increase/(decrease) in trade and other payables

  1,540,779 

(87,272)

  1,859,835 

Cash used in operations

(2,964,830)

(1,195,661)

(3,249,137)

Net cash used in operating activities

(2,964,830)

(1,195,661)

(3,249,137)

Cash flows from investing activities

 

 

 

Purchases of property, plant and equipment

(13,791)

 -

(1,885,984)

Purchase of intangible assets

(3,274,438)

 -

(45,061)

Net cash used in investing activities

(3,288,229)

 -

(1,931,045)

Cash flows from financing activities

 

 

 

Net proceeds from debt

 -

 13,346,750 

 13,202,175 

Interest received

  14,536 

  369 

2,596

Interest paid

(1,188,330)

(153,731)

(540,484)

Repayments of right of use liability

(149,337)

 -

(42,771)

Issue of share capital

  15,039,061 

 13,365,889 

  13,194,209 

Share issue costs

(1,048,659)

 -

(1,101,320)

Net cash from financing activities

  12,667,271 

  26,559,277 

  24,714,405 

Net increase/(decrease) in cash and cash equivalents

6,414,212 

  25,363,616 

  19,534,223 

Cash and cash equivalents at the beginning of the period

  19,719,072 

  182,164 

  184,849 

Cash and cash equivalents at the end of the period

  26,133,284 

  25,545,780 

  19,719,072 

 

notes to the condensed interim consolidated financial INFORMATION

SIX MONTHS ENDED 30 JUNE 2018

 

1. Accounting policies

 

General information

 

This interim financial information is for Echo Energy plc and subsidiary undertakings. The company is registered, and domiciled, in England and Wales and incorporated under the Companies Act 2006.

 

Basis of preparation

 

The condensed consolidated interim financial information for the period from 1 January 2018 to 30 June 2018 has been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting as adopted by the European Union ("EU") and on the going concern basis. They are in accordance with the accounting policies set out in the statutory accounts for the year ended 2017 and are expected to be applied for the year ended 31 December 2018.

 

The comparative figures for the period 30 June 2017 and 31 December 2017 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 2017.

 

A copy of the company's statutory accounts for the year ended 31 December 2017 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 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.

 

Based on their strategic plans and working capital forecasts, the directors have a reasonable expectation that the group has adequate resources to continue in existence for the foreseeable future.

 

Therefore, they continue to adopt the going concern basis in the preparation of the condensed 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 these 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 the consolidated financial statements for the year ended 31 December 2017.

 

Revenue Recognition

 

The Group was an early adopter of IFRS 15 in the accounting period ended 31 December 2017. At that time the Group had no revenue stream. The adoption of IFRS 15 has no material impact on the recognition of revenue for the Group. Revenue from the production of hydrocarbons from fields in which the Group has an interest with other producers is recognised based on the Group's working interest in a licence. Revenue is recognised based on whether physical title has passed from the Group as determined by the performance obligations under the contract.

 

The transaction price for gas and oil is determined in accordance with the mechanisms determined under each contract.

 

IFRS 9

 

IFRS 9 became effective on 1 January 2018 and will affect both the measurement and disclosure of financial instruments. Echo will adopt the simplified approach to the Expected Credit Loss (ECL) model as our trade receivables and contract assets do not contain a significant finance component. Adoption of the standard has no effect on the results of comparative periods.

 

Inventories

 

Inventories of petroleum crude products are valued at net realisable value, based on the pricing mechanisms of the sales contracts.

 

2. Business segments

 

Operating segments are based on internal reports about components of the Group, which are regularly reviewed and used by the Board of Directors being the Chief Operating Decision Maker ("CODM") for strategic decisions and resource allocation, in order to  allocate resources to the segment and to assess its performance. The Group's reportable operating segments are as follows:

 

a. Parent company

b. Eastern Austral Basin

c. Tapi Aike

d. Bolivia

e. Ksar Hadada

 

In future periods the Tapi Aike prospect will be included as an Operating Segment, as at the Balance sheet date there was no asset specific activity to report.

 

The CODM monitors the operating results of each segment for the purpose of performance assessments and making decisions on resource allocation. 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.

 

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

 

 

Parent company

£'000

Eastern  Austral

Basin

£'000

Tapi Aike  £'000

Bolivia

£'000

 Ksar

Hadada 

£'000

 Consol-idation
£'000

 Total

£'000

Six months to 30 June 2018

 

 

 

 

 

 

 

Revenue

  -

2,886

  -

-

  -

  -

2,886

Cost of sales

  -

(2,700)

  -

-

  -

  -

 (2,700)

Exploration expense

 (62)

 (121)

  -

 (249)

  -

  -

 (432)

Administrative expenses

 (2,230)

    (96)

 (8)

 (179)

-

-

 (2,513)

Finance revenue

    14

  -

  -

  -

  -

  -

14

Finance expense

 (857)

 (844)

 (299)

-

  -

  -

 (2,000)

Gain on disposal of foreign subsidiary

394

 -

 -

 -

 -

 -

394

Loss before tax

 (2,741)

 (875)

 (307)

 (428)

  -

  -

 (4,351)

Assets

32,004

 5,579

(172)

(312)

(1,137)

1,125

37,087

Liabilities

(12,190)

(5,984)

(26)

(25)

(18)

  -

(18,243)

The gain on disposal of foreign subsidiaries removes the Foreign Currency Revaluation Reserve which related to the discontinued operations in Italy.

 

Parent company

£'000

Eastern  Austral

Basin

£'000

Tapi Aike

 £'000

Bolivia

£'000

 Ksar

Hadada 

£'000

 Consol-idation
£'000

 Total

£'000

Six months to 30 June 2017

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

Cost of sales

  -

  -

  -

  -

  -

  -

  -

Exploration expense

  -

  -

  -

  -

  -

  -

  -

Administrative expense

 (1,271)

  -

  -

  -

 (41)

    25

 (1,287)

Finance revenue

    -

  -

  -

  -

  -

  -

    -

Finance expense

 (364)

  -

  -

  -

-

  -

 (364)

Loss before tax

 (1,635)

  -

  -

  -

 (41)

    25

 (1,651)

Assets

26,847

  -

  -

  -

    433

 (1,182)

26,098

Liabilities

 (10,698)

  -

  -

  -

 (1,120)

  1,092

(10,726)

 

 

 

 

 

 

 

 

Year to 31 December 2017

 

 

 

 

 

 

 

Revenue

  -

  -

  -

  -

  -

  -

  -

Cost of sales

  -

  -

  -

  -

  -

  -

  -

Exploration expense

  -

  -

  -

  -

  -

  -

  -

Impairment of

 

 

 

 

 

 

 

intangible assets

  -

  -

  -

  -

    (432)

  -

    (432)

Administrative expense

 (3,768)

 (590)

(590)

(282)

 (92)

  -

 (5,322)

Finance revenue

    3

  -

  -

  -

  -

  -

    3

Finance expense

 (1,687)

  -

  -

  -

  -

  -

 (1,687)

Income tax

  -

  -

  -

  -

  -

  -

  -

Loss before tax

 (5,453)

 (590)

(590)

(282)

 (525)

  -

 (7,440)

Assets

22,260

1,886

 

    33

    

 (1,233)

    22,946

Liabilities

(14,043)

  -

  -

(120)

 (1,149)

  1,233

(14,079)

 

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

 

 

 United

 Kingdom

 £

 South

America

 £

 Total

 £

30 June 2018

 

 

 

Property, plant and equipment

    256,599

    9,600

    266,199

Intangible assets

  -

  7,368,086

  7,368,086

30 June 2017

 

 

 

Property, plant and equipment

  -

    432,486

    432,486

Intangible assets

  1,957

  -

  1,957

31 December 2017

 

 

 

Property, plant and equipment

  275,130

  10,015

  285,145

Intangible assets

  -

  1,885,984

  1,885,984

 

3. Financial expense

 

 

Six months to 30 June

2018

£

Six months to 30 June

2017

£

31 December 2017

£

Interest payable on long term loans

   1,416,130 

   364,288 

   1,660,001

Other including foreign exchange

  559,099

  -

  -

Accretion of right of use liabilities

   24,880 

  -

   27,198

 

2,000,109 

   364,288 

1,687,199

Interest expense includes interest at 8% coupon rate of £757,866, the unwinding of the discount on the issue of debt of £485,524 and the amortisation of loan fees of £172,740.

 

Foreign exchange movements include the revaluation of US dollar denominated intercompany balances accounted locally in Argentina, and in the UK in GBP. Other exchange movements include revaluation of euro denominated loans and US dollar bank balances.

 

4. Taxation

 

The group has tax losses available to be carried forward in certain subsidiaries and the parent.

 

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 2018, or in the six month period to June 2017, or the year to 31 December 2017.

 

5. Loss per share

 

The calculation of basic and diluted loss per share at 30 June 2018 was based on the loss attributable to ordinary shareholders. The weighted average number of ordinary shares outstanding during the period ended 30 June 2018 and the effect of the potentially dilutive ordinary shares to be issued are shown below.

 

 

Six months to 30 June

2018

£

Six months to 30 June

2017

£

31 December 2017

£

Net loss for the year

 (4,350,860)

 (1,676,258)

 (7,413,556)

Basic weighted average ordinary shares in issue during the year

416,479,046

186,159,251 

276,158,657 

Diluted weighted average ordinary shares in issue during the year

416,479,046 

186,159,251 

276,158,657 

Loss per share (pence)

 

 

 

Basic

 (1.0)

 (0.9)

 (2.7)

Diluted

 (1.0)

 (0.9)

 (2.7)

In accordance with IAS 33 and as the average share price in the year is lower than the exercise price, the share options do not have a dilutive impact on earnings per share for the period ended 30 June 2018.

 

6. Property, plant and equipment

 

 

Fixtures & Fittings

£

Property

Right of Use Assets

£

Total

£

six months to 30 June 2018

 

 

 

Cost

 

 

 

1 January 2018

   70,823 

   268,872 

   339,695 

Exchange differences

   580 

  -

   580 

Disposals

 (14,016)

 (268,872)

 (282,888)

Additions

   8,698 

   232,971 

   241,669 

Six months to 30 June 2018

   66,085 

   232,971 

   299,056 

Depreciation

 

 

 

1 January 2018

   27,663 

   26,887 

   54,550 

Exchange differences

   336 

  -

   336 

Charge for the period

   7,601 

   26,887 

   34,488 

Disposal

 (2,803)

 (53,774)

 (56,577)

Six months to 30 June 2018

   32,797

  -

   32,797 

Carrying amount

 

 

 

30 June 2018

33,288

232,971

266,259

Six months to 30 June 2017

 

 

 

Cost

 

 

 

1 January 2017

   31,765 

  -

   31,765 

Exchange differences

   209 

  -

   209 

30 June 2017

  31,974 

  -  

  31,974 

Depreciation

 

 

 

1 January 2017

   28,118 

  -

   28,118 

Exchange differences

   209 

  -

   209 

Charge for the period

   1,690 

  -

   1,690 

30 June 2017

  30,017 

  -  

  30,017 

Carrying amount

 

 

 

30 June 2017

  1,957 

  -  

  1,957 

 

 

Fixtures & Fittings

£

Property

Right of Use Assets

£

Total

£

Year to 31 December 2017

 

 

 

Cost

 

 

 

1 January 2017

31,765

-

   31,765 

Exchange differences

  1,670 

-

   1,670 

Transfer to discontinued operations

 (7,673)

-

 (7,673)

Additions

   45,061 

   268,872 

   313,933 

31 December 2017

   70,823 

   268,872 

   339,695 

Depreciation

 

 

 

1 January 2017

   28,118 

-

   28,118 

Exchange differences

   39 

  -

   39 

Transfer to discontinued operations

(7,673)

-

(7,673)

Charge for the period

 7,179

26,887

 34,066

31 December 2016

   27,663 

26,887

   54,550 

Carrying amount

 

 

 

31 December 2017

   43,160 

   241,985 

   285,145 

 

7. intangible assets

 

Development and exploration

 

 

Argentina

E&E

£  

Ksar Hadada exploration acreage

£

Total

£ 

Six months to 30 June 2018

 

 

 

Cost

 

 

 

1 January 2018

   1,885,984 

   1,513,315 

   3,399,299 

Effect of foreign exchange restatement

(683,506)

  -

(683,506)

Additions

   6,165,608 

  -

   6,165,608 

30 June 2018

   7,368,086 

   1,513,315 

   8,881,401 

Amortisation

 

 

 

1 January 2018

  -

   1,513,315 

   1,513,315 

Impairment charge for the period

  -

  -

  -

30 June 2018

  -

   1,513,315 

   1,513,315 

Carrying amount

 

 

 

30 June 2018

   7,368,086 

  -

   7,368,086 

Six months to 30 June 2017

 

 

 

Cost

 

 

 

1 January 2017

  -

   1,513,315 

   1,513,315 

Additions

  -

  -

  -

30 June 2017

  -

   1,513,315 

   1,513,315 

Amortisation

 

 

 

1 January 2017

  -

   1,080,829 

   1,080,829 

Impairment charge for the period

  -

  -

  -

30 June 2017

  -

   1,080,829 

   1,080,829 

Carrying amount

 

 

 

30 June 2017

  -

432,486

432,486

Year to 31 December 2017

 

 

 

Cost

 

 

 

1 January 2017

  -

   1,513,315 

   1,513,315 

Additions

   1,885,984 

  -

   1,885,984 

31 December 2017

   1,885,984 

   1,513,315 

   3,399,299 

Amortisation

 

 

 

1 January 2017

  -

   1,080,829 

   1,080,829 

Impairment charge for the period

  -

   432,486 

   432,486 

31 December 2017

  -

   1,513,315 

   1,513,315 

Carrying amount

 

 

 

31 December 2017

   1,885,984 

  -

 1,885,984

 

For the purpose of impairment testing of intangible assets, recoverable amounts have been determined based upon the value in use of the group's projects. The Argentine assets have been assessed for indicators of impairment, based on the expectation of continuing operations in the Austral basin, no impairment indicators apply.

 

 

8. Cash and cash equivalents

 

 

Six months to 30 June

2018

£

Six months to 30 June

2017

£

31 December 2017

£

Cash Held by Joint Venture Partners

5,459,023

-

-

Bank Balances

   20,674,261 

   25,545,780 

   19,719,072 

 

   26,133,284 

   25,545,780 

   19,719,072 

 

9. Share capital

 

 

Six months to 30 June

2018

£

Six months to 30 June

2017

£

31 December 2017

£

Issued, called up and fully paid

 

 

 

474,939,144 0.25p (June 2017: 361,473,066 0.25p) ordinary shares

 

 

 

1 January 2018

   3,112,586 

   2,430,612 

   2,430,612 

Equity shares issued

   275,999 

   674,307 

   681,974 

30 June 2018

   3,388,585 

   3,104,919 

   3,112,586 

The holders of 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.

 

Shares issued and the subdivision of capital during the year was as follows:

 

 

Date

Shares

Price

1 January 2018

 

  364,539,733

 

Shares issued @ .25p equity placing

3/1/2018

  36,391,412

17.5p

Shares issued @ .25p, exercise of warrant

9/1/2018

  572,553

15.1875p

Shares issued @ .25p, exercise of warrant

23/1/2018

  499,999

3p

Shares issued @ .25p, option exercise

16/4/2018

  1,750,000

1.625p

Shares issued @ .25p, open offer shares placing

25/5/2018

  71,185,447

12p

30 June 2018

 

  474,939,144

 

 

10. Share premium account

 

30 June

2018

£

30 June

2017

£

31 December 2017

£

1 January 2018

   24,636,445 

   17,621,763 

   17,621,763 

Premium arising on issue of equity shares

   14,770,257 

   7,918,921 

   8,116,002 

Transaction costs

 (1,048,659)

 (101,320)

 (1,101,320)

30 June 2018

   38,358,043 

   25,439,364 

   24,636,445 

 

11. Share-based payments

 

(a) Warrants over ordinary shares

 

Details of the tranches of warrants outstanding at the period-end are as follows:

 

 

Number

'000

30 June 2018

 WAEP*

(Pence)

30 June

2018

Number

'000

30 June

2017

 WAEP*

(Pence)

30 June

2017

Number

'000

31 December 2017

 WAEP*

 (Pence)

31 December

 2017

Outstanding as at 1 January

286,224

7

  3,180

6

  47,928

  7

Granted during the year

-

-

  35,203

  12

  287,724

  12

Forfeited during the period

(160)

30

 (605)

  31

 (7,282)

28

Exercised during the year

(1,073)

20

 (115)

  3

 (42,146)

  3

Options outstanding as at 31 December

284,991

12

  37,663

  13

  286,224

 12

(b) Share Options

 

Details of the tranches of share options outstanding at the period  end are as follows:

 

 

Number

'000

30 June 2018

 WAEP*

 (Pence)

30 June

2018

Number

'000

30 June

2017

 WAEP*

  (Pence)

30 June

2017

Number

'000

31 December 2017

 WAEP*

 (Pence)

31 December

 2017

Outstanding as at 1 January

  75,123

  8

197,199

  73

197

  73

Granted during the year

  10,461

  13

66,400

  2

96,400

  6

Expired during the year

  -  

  -  

  -  

  -  

  -  

  -  

Forfeited during the period

  (2,363)

  5

 (21)

  75

 (21,474)

  2

Exercised during the year

  (1,750)

  2

  -  

  -  

  -  

  -  

Options outstanding as at 30 June

  81,471

  9

66,576

  2

75,123

  8

Exercisable at 30 June 

10

  75

176

  73

123

  72

* The weighted average outstanding life of vested share options is 6.7 years. The weighted average share price of outstanding options is 8.71p (2017 7.81p)

 

12. Loans due over one year

 

30 June

2018

£

30 June

2017

£

31 December 2017

£

5 Year Secured Bonds

10,761,418

 9,416,280

 10,529,751

Other Loans

878,744

 829,359

 882,610

 

 11,640,162

 10,245,639

 11,412,361

 

 

Balance

as at 31 December 2017

Amortised finance charges less cash interest paid

Exchange Adjustments

30 June

2018

20 million 5 Year Secured Bonds

 12,026,845

  104,354

 (45,427)

  12,085,772

Other Loans

882,610

 (3,866)

  -

  878,744

Loan Fees

(1,497,094)

  172,740

  -

 (1,324,354)

Total

11,412,361

  273,228

 (45,427)

  11,640,162

 

On 22 May 2017 the Company announced that Nusakan Plc (formerly Greenbury S.a.) had subscribed for five year non-amortising secured bonds with an aggregate issue value of €20 million (the Bonds). Alongside the Bonds, the company issued 169,402,469 warrants (the "Warrants") to subscribe for new ordinary shares in the company at an exercise price of 15.1875 pence per ordinary share and an exercise period of approximately five years concurrent with the term of the Bonds, to Nusakan Plc. The Bonds are secured over the share capital of Echo Energy Limited. The Bonds have an 8% coupon and were issued at a 20% discount to par value.

 

A total cash fee of £1.7 million (€2 million) was payable by the Company.

 

The warrants were recorded within equity at fair value on the date of issuance and the proceeds of the Bonds net of issue costs were recorded as non-current liability. The coupon rate of 8% for the Bonds ensures that the company's ongoing cash outflow on interest payments remains low, conserving the company's cash resources. The effective interest rate is approximately 21.55%.

 

The 5-year secured Bonds are due in May 2022.

 

13. Subsequent events

 

Following the successful completion of the drilling campaign in the first half of the year, Echo announced, on 6 July, the mobilisation of a well testing/completion rig. The initial well tested was ELM-1004. During testing the operator found it challenging to completely isolate all the interpreted gas bearing zones from a deeper highly productive water bearing zone. Following the isolation of an 8 m interval at the top of the section, dry gas was successfully produced to surface via the rig de-gassing system, the operator is now evaluating options in support of an hydraulic stimulation to boost well production.

 

Testing of the CSo-2001(d) well determined that long term production from the adjacent Springhill formation had caused significant pressure depletion across the western flank of the field, and that the remaining gas in the underlying Tobifera will likely be insufficient to contribute economically to the Fracción D gas project. The rig subsequently moved to undertake a campaign of pulling jobs to reinstate oil production in three wells, and install a pump in CSo-80 following earlier workover activity. The Company is working to finalise an optimal completion and test programme for the EMS-1001 well. Given the ongoing nature of the evaluation work being undertaken on Fracción C,D and LLC, in accordance with our accounting policy no indicators of impairment exist. All RNS statements relating to operational activity are available at www.echoenergyplc.com.

 

On the 31 August Echo Energy plc announced the signing of a Letter of Intent to sign a new one year Technical Evaluation Agreement with Yacimientos Petroliferos Fiscales over the Rio Salado licence area, onshore Bolivia.

 

Martin Hull, the Company's new Chief Financial Officer, joined on the 1 August 2018.

 

 

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.

 


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 [email protected] or visit www.rns.com.
 
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