Echo Energy continuing positive momentum (LON:ECHO)

Echo Energy plc (LON:ECHO) Chief Executive Officer Martin Hull caught up with DirectorsTalk to discuss result of the bondholder meeting, the key points of the restructuring, operational progress and what’s in store for the company beyond the near term.

Q1: First off, why is today’s news so important for Echo Energy?

A1: Today’s news is really positive for the company and for all of our stakeholders. By reaching agreement with our bond holders, the people who own our debts, we are finally now able to restructure our balance sheet. It’s something we wanted to do and frankly needed to do for a long time.

It marks a real step change in the business. It’s a break from the past and it enables us to move forward onto much firmer financial footing. I must say I’m very grateful to the bondholders for their constructive discussions and really their ongoing support.

We’ve made a lot of progress recently operationally, and of course that’s something that the team and I are very focused on and we’re keen to maintain that momentum as we continue to increase production. But today’s announcement is very much part of the overall picture for the business, and it is really very much part of continuing that positive momentum.

Q2: Could you just remind us of the key points of the restructuring?

A2: Although it’s been a rather complicated process, the deal itself is very simple. So, what we’ve agreed to do is to convert the majority of our outstanding debt into equity at a price of 0.45p. That price is a large premium, it’s more than 70% to our current share price, and I’m must say that’s a real vote of confidence in our equity from our debt holders and we believe it is strongly creative to shareholder value.

So, the remaining debt about €10 million of bonds is extended until 2032 and critically at an interest rate of only 2%. Financing a business at such low cost in this market really is extraordinary, it is cheaper than any mortgage you’re likely to see out there and certainly cheaper than the UK’s government’s 10-year debt priced at the moment. That is a sense of a scale of what we have achieved with this agreement.

Overall, the company’s long term debt reduces from more than €30 million to €10 million and is now extended by 10 years, again, it really does transform our balance sheet.

Q3: Now, you mentioned operational progress in recent months. Could you just provide us with an update?

A3: So, you’ll remember a few months ago you and I spoke about our announced plan to increase production by 40%. We did an interview which broke that plan down in a lot of detail and I would encourage investors to revisit that and look at the detailed presentation.

What I’m really delighted to be doing is now delivering on that plan. So, we’ve achieved the first priority of delivering and installing the new power generators, we’re on track to completing the second priority, which is to upgrade the compressors, including at Oceano, and we made announcement about positive progress on that earlier this week. We’re also making progress in upgrading our rig and bringing forward the time when we’ll be opening up our extensive well portfolio.

Now importantly, we are already seeing the benefits of those efforts in our production. Q3 production was up on Q2 and in fact, it marked the eighth quarter in a row of liquids production increase. Perhaps more importantly, we’ve also seen a significant increase in the production capacity, we are now being consistently producing at rates of over 1,600 BOE per day. We’re already well on the way to meeting our near term targets.

Q4: What’s in store for Echo Energy beyond the near term?

A4: Our priority remains delivery of the near term production growth plan and I’m very focused and the team is very focused and so is our partner very focused on doing that in Argentina as we speak.

Nevertheless, we believe there remains big potential, really huge potential within the assets in excess of the 40% production increase. This is something we’ve talked about before and you can see our extensive reserve portfolio. What we want to do is access that so we have an extensive portfolios of workovers in the pipeline and plans to grow through production through the workover programme and we also want to bring those extensive reserves into production.

The transformation of the balance sheet following today’s announcement really brings all over that forward and that potential within reach. We are no longer spending money servicing debt, instead we can invest it into our assets.

Click to view all articles for the EPIC:
Or click to view the full company profile:
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Echo Energy

More articles like this

Echo Energy plc

Oil prices rebound after hitting lowest since 2021

Oil prices rebounded and rose over 1% on Monday after diving to their lowest levels in 15 months as the market worried that risks in the global banking sector could spark a recession that would sap fuel demand. In

Echo Energy

Oil prices rebound

Oil prices rebounded more than 1% on Wednesday, recovering from the previous day’s plunge, as a stronger OPEC outlook on China’s demand helped offset bearish global investor sentiment in the wake of the recent U.S. bank failures. Brent

Echo Energy

Oil edges higher on supply tightness

Oil prices edged slightly higher on Monday, bouncing back from early losses, as top oil executives at an energy conference in Houston discussed supply tightness and hopes for rising Chinese demand. Oil market and logistics are tight and

Echo Energy

Oil settles up

Oil prices settled up slightly on Wednesday as signs of ample supply, including growing U.S. crude inventories, offset growing hopes for higher demand after a jump in manufacturing in top crude importer China. Brent crude futures settled up 86 cents, or

Echo Energy

Oil prices rise on China demand recovery and supply concerns

Oil prices climbed on Monday due to positive sentiment regarding China’s demand recovery, concerns about underinvestment impacting future oil supply, and major producers maintaining output limits, as Reuters reported.  Brent crude increased by 0.6% to reach $83.47 a

Echo Energy

Santa Cruz Sur production hits peak in Q4 2022

Latin America-focused energy company Echo Energy has seen its Santa Cruz Sur field reach the highest quarterly production levels of 2022 in the fourth quarter. The asset in which Echo holds a 70 percent interest, reached an aggregate of 532,302

Echo Energy

Oil rises for 4th day

Oil edged up in early trade on Thursday, extending gains for a fourth consecutive day, as crude loading disruptions in Turkey and optimism over China’s recovering demand continued to buoy sentiment. Brent crude futures rose 14 cents, or 0.2%

Echo Energy

Oil prices inch up

Oil prices inched up in early trade on Monday after falling around 8% last week to more than three-week lows as jitters over major economies outweighed signs of a demand recovery in China, the world’s top oil importer.

Echo Energy

Echo Energy secures two new gas sales contracts

Echo Energy plc (LON:ECHO), the Latin American focused energy company, has provided the following commercial update regarding the Company’s gas sales from the producing Santa Cruz Sur assets, onshore Argentina, and a financial update. New Gas Sales Contracts

Echo Energy

Oil heads for second week of gains

Oil rose on Friday and was heading for a second straight weekly gain, spurred largely by brightening economic prospects for China and resulting expectations of a boost to fuel demand in the world’s second-biggest economy. The lifting of

Echo Energy

Oil prices gain around 1%

Oil prices rose on Wednesday to their highest since early December on optimism that the lifting of China’s strict COVID-19 curbs will lead to a fuel demand recovery in the world’s top oil importer. Brent crude futures were up

Echo Energy

Oil nudges higher after China opens borders

Oil prices edged up on Monday, a day after travellers streamed into China following a reopening of borders that lifted the fuel demand outlook and partly offset concerns of global recession. Brent crude futures had risen 53 cents,

Echo Energy

Oil stocks thrust London shares to positive 2023 start

UK’s exporter-heavy FTSE 100 jumped to a seven-month high on Tuesday as oil stocks rallied, with majors Shell and BP putting the broader energy sector on track for its biggest single day jump in six weeks. The blue

No more posts to show