Echo Energy PLC LOI for New Rio Salado TEA and Update re Sales (3364Z)
August 31 2018 - 2:00AM
UK Regulatory
TIDMECHO
RNS Number : 3364Z
Echo Energy PLC
31 August 2018
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:
Echo Energy plc
Fiona MacAulay, CEO f.macaulay@echoenergyplc.com
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
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.
END
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