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

The Company confirms that, following a successful commercial process for industrial clients, it has secured two new gas sales contracts (the “Contracts”) for the upcoming 2023-2024 period with materially improved terms compared with the contracts announced on 3 May 2022.

The Contracts have an initial term of 12 months, with gas sales under the Contracts beginning in May 2023. The Contracts provide gross 6.8 MMscf/d of committed production (4.8 MMscf/d net to Echo) at an increased average price of US$4.48 per Mmbtu for the 2023-2024 period (compared with US$4.33 per Mmbtu for the previous period). In addition, an upfront gross cash payment of US$1 million (US$0.7 million, net to Echo) will immediately be paid and applied towards the working capital of the Santa Cruz joint venture.

The Company is able to elect to sell additional volumes of up to 0.7 MMscf/d (net to Echo) under the Contracts. This optionality, at the election of the Santa Cruz Sur partners, allows for the potential sale of additional volumes under the Contract at contract pricing, whilst also providing the Santa Cruz partners with a degree of flexibility with which to capitalise on spot market or other pricing when attractive. The Contracts additionally enable the potential for the parties to mutually extend arrangements for a further two years, subject to future negotiation and market pricing.  

The improved pricing terms and the upfront cash payment (without financing costs), combined with volume flexibility, represent a significant step for the Company in its strategy to maximise the commercial value of its production as it continues with the ongoing programme of increasing production. 

Reduction in Joint Venture Creditor Balances

The Company reported total creditors of approximately US$19.5 million in its unaudited Interim Results announced on 30 September 2022. Of this total, approximately US$11.5 million related to the Company’s joint venture in Argentina (net to Echo), which has since been estimated to have reduced to approximately US$9.3 million (unaudited) as at 31 December 2022 using the official ARS$ to US$ exchange rate of 177. This estimated creditor amount when calculated using the current ARS$ to US$ international market exchange rate (blue chip swap) of 368, is US$4.5 million (unaudited). This reduction is due to a combination of creditor negotiations, positive business developments, favourable exchange rate movements and the repayment of creditors from production cash flows.

The Company continues to focus on successfully reducing its creditor balances in a controlled manner, whilst also pursuing the strategic objective of investing in order to further increase production and asset value at Santa Cruz Sur.

The Company’s unaudited cash balance as at 2 January 2023 was US$1.1 million.

Martin Hull, Chief Executive of Echo Energy, commented: “We are very pleased to see our financial and commercial positions continuing to improve and provide firmer foundations for our growth strategy, as we look to increase production and revenues across our asset base. These enhanced gas sales contracts will contribute to that process while the decrease in our joint venture creditors contributes to a stronger financial footing for Echo as we grow the business.”

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 markets steady as investors weigh banking crisis

Oil prices stabilised in Asian trade on Monday as investors sought cues from broader financial markets, while comments by Russian President Vladimir Putin over the weekend ratcheted up geopolitical tensions in Europe. Brent crude futures held unchanged at $74.99 a

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

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