Echo Energy to materially increase Santa Cruz Sur production by c.40%

Echo Energy plc (LON:ECHO), the Latin American focused energy company, has provided an operational update regarding its Santa Cruz Sur assets, onshore Argentina for H1 2022 to 30 June 2022. In addition, the Company confirms the agreement by the Santa Cruz Sur partners to a plan to materially increase Santa Cruz Sur production by c.40% above average H1 2022 production levels.

H1 2022 Production and Operational Update

Production over the period from 1 January 2022 to 30 June 2022 has continued to remain strong and reached an aggregate of 261,290 boe net to Echo during the period, including 48,600 bbls of oil and condensate and 1,280 MMscf of gas.

Net liquids production in Q2 2022 averaged 272 bopd, an increase over Q1 levels (Q1 2022: 265bopd) despite, as previously announced, a 35-day maintenance and upgrade programme on the Oceano field during the quarter, when oil and gas production from the field was temporarily brought offline.

Net gas production averaged 6.8 MMscf/d during Q2 2022 (Q1 2022: 7.4 MMscf/d), with Q2 2022 production again impacted as a result of the Oceano field production being brought temporarily offline for maintenance and upgrades to the compressor and associated infrastructure.

As previously announced, the successful upgrade to the compressor was an important and planned operational milestone and has resulted in substantial increases to production from the Oceano field since being being brought back on line, with the full impact expected to be seen in future quarterly production figures.    

Santa Cruz Sur – Production and Infrastructure Enhancement Plan

The Company is additionally pleased to announce that the Santa Cruz Sur joint venture partners have agreed to a detailed plan to materially increase production at Santa Cruz Sur and to improve the quality of sales liquids from the Santa Cruz Sur assets (the “Enhancement Plan”).

Over a six month period, anticipated to commence in Q3 2022, the Santa Cruz Sur partners intend to seek to increase production by approximately 40% from the levels previously achieved over H1 2022. If achieved, the Enhancement Plan would increase total daily production from Santa Cruz Sur to around 2,000 boepd, net to Echo’s 70% interest in Santa Cruz Sur.

Under the newly agreed Enhancement Plan, the Santa Cruz Sur partners will seek to increase production levels through the recommissioning and bringing into production of existing oil wells currently offline. Around 30 or more  wells from the existing well stock are intended to be gradually brought back into production over the six month period utilising an existing pulling rig and field personnel owned and employed by the Santa Cruz Sur joint ventures. The re-opening of the existing wells could increase production levels by up to c. 240 bopd of liquids and 2 MMsf/d of associated gas, net to Echo.

The plan to bring existing wells in to production under the Enhancement Plan is in addition to, and will come ahead of, previously announced intentions regarding identified portfolios of well workover candidates in respect of Santa Cruz Sur resource/reserves not currently in production.

The additional producing wells will be supported by infrastructure upgrades to sustain and contribute to elevated production levels. Intended infrastructure upgrades under the Enhancement Plan will be focussed around three operational priorities.

The first is the installation of additional electrical power generation capacity across the Cerro Molino Oeste, El Indio Oeste and Oceano fields. Installation is anticipated to take a month from commencement. A second set of planned infrastructure improvements will be focused on the maintenance and optimisation of the compressors at Cerro Norte and Campo Bremen to enable the increased volumes of associated gas to be processed and then sold into the main gas export line. This operation is anticipated to take approximately three months from commencement and will be carried out with the intention of minimising any disruption to existing gas production, although some temporary impact is expected.

The third set of infrastructure upgrades will prioritise a substantial increase of quality of Santa Cruz liquid blends. This will be achieved through the  the installation of mercury removal facilities at Cerro Norte. When operational, this facility will enable premium export pricing to be achieved for a higher volume of liquids than is currently the case. During H1 2022, the higher-quality export liquid blends achieved on average a premium of US$ 21 per bbl over lower-quality blends. The operation from installation to commissioning is anticipated to take around four months from commencement.

The Company estimates that, on completion, the aggregate effect of the three sets of infrastructure upgrades described above could, including the up to 240 bopd of liquids and up to 2 MMsf/d of associated gas (net to Echo) that would be expected to be delivered from the well reopening programme, result in up to an additional 600 boepd of production net to the Company.

With the agreement between the Santa Cruz Sur partners as to the Enhancement Plan, the delivery of the intended operations is expected to require an estimated US$2.1 million (gross to 100% Santa Cruz Partnership) to deliver in full over the entire duration of the Enhancement Plan’s implementation and, notwithstanding existing Santa Cruz Sur joint venture creditor balances of an estimated (unaudited) c.$13.9m ($9.7m net to Echo’s 70% interest) as at 30 April 2022, the Santa Cruz Sur partners currently believe that a significant proportion of the cost of the Enhancement Plan can be met from existing, and to be increased, Santa Cruz Sur cash flows.  

In advancing the Enhancement Plan, the Santa Cruz Sur partners intend to engage with the local province in respect of a proposed extension to the term of the Santa Cruz Sur licences.

This Enhancement Plan is the agreed next step for production growth from Santa Cruz Sur and is focused on low-risk infrastructure upgrades to sustain the increased production from existing well stock. In addition, the Santa Cruz Sur  assets includes a portfolio of other opportunities across the risk-reward spectrum and additional cash flows which would be delivered from the implementation of the Enhancement Plan will broaden the scope for portfolio choices in bringing additional existing reserves and resources into production.

The Company looks forward to continuing to update shareholders on progress on these plans throughout this year.

Martin Hull, Chief Executive Officer of Echo, commented:

“Following a strong H1 2022 of production, we are pleased to announce an important and material step in the Company’s strategy to deliver organic growth from the Santa Cruz Sur assets. The ability to now materially increase production levels from Santa Cruz Sur is a result of the right choices that were made during the Pandemic creating a strong operational platform on which to build. Having stabilised the business, we are now able to pivot the asset towards the current momentum in commodity prices. By significantly increasing production we drive a virtous circle of cash flow strengthening our financial position and providing additional potential for future growth. This is underpinned by the strong pipeline of identified opportunities within the Santa Cruz Sur asset base. We look forward to working with our Partners on this and to further update the market as our work programme progresses.”

Note

The assignment of Echo’s 70% non-operated participation in the Santa Cruz Sur 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. bopd means barrels of oil per day; boepd means barrels of oil equivalent per day; bbl means barrel; MMscf means million standard cubic feet of natural gas; and MMscf/d means million standard cubic feet of natural gas per day. The information contained in this announcement has been reviewed by Echo Energy’s Vice President, Exploration, Dr. Julian Bessa Msc, DPhil, MBA ,a Fellow of the Geological Society and President of the Petroleum Exploration Society of Great Britain.

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

Echo Energy revenue increase of 6% to US$6.2 million

Echo Energy plc (LON:ECHO), the Latin American focused upstream energy company, has announced its unaudited interim results for the six months ended 30 June 2022.  H1 2022 Highlights: ·    Revenue increase of 6% to US$6.2 million in H1 2022

Echo Energy

Echo Energy production and infrastructure enhancement plan update

Echo Energy plc (LON:ECHO), the Latin American focused energy company, has provided an operational update regarding further progress in the execution of the Santa Cruz Sur assets Production and Infrastructure Enhancement Plan previously announced by the Company on 7 July 2022.

Echo Energy

Oil prices edge up

Crude oil futures in European trading hours Tuesday were slightly higher and remain prone to sharp swings amid uncertainty over short-term direction. Front-month November ICE Brent futures were trading at $92.60/b (0915 GMT), compared to Monday’s settle of

Echo Energy

Oil prices climb higher

Crude oil futures in European trading hours Tuesday were edging higher as perceived tight supplies and the impact of the Russian price cap provided support, although Covid lockdowns in China continue to cast a major shadow over sentiment.

Echo Energy

Echo Energy an important year which changed the outlook for the positive

Echo Energy plc (LON:ECHO), the Latin American focussed full cycle energy Company, has announced its audited results for the twelve months ended ended 31 December 2021. 2021 Highlights ·    Production capacity increased during the period pursuant to Santa Cruz Sur facilities

Echo Energy

Oil prices jump more than $2

Oil prices rose more than $2 a barrel on Monday, extending gains as investors eyed possible moves by OPEC+ producers to cut output and support prices at a meeting later in the day. Brent crude futures advanced by

Echo Energy

Echo Energy makes progress at Santa Cruz Sur

Latin America-focussed energy company Echo Energy updated the market on progress in the production and infrastructure enhancement plan at the Santa Cruz Sur assets on Friday. The AIM-traded firm said the first operational priority under the plan was to upgrade

Echo Energy

Oil rises $1 a barrel

Oil rose $1 a barrel on Tuesday as tight supply moved back into focus as a result of Saudi Arabia floating the idea of OPEC+ output cuts to support prices and the prospect of a drop in U.S.

Echo Energy

Echo Energy’s debt restructuring

Latin America-focused oil and gas company Echo Energy is restructuring its debt and raising at least £450,000 via a placing at 0.25p a share. This was announced after the market closed and the share price had closed 5.06% higher

Echo Energy

Echo Energy receive a real vote of confidence from Lombard (VIDEO)

Echo Energy plc (LON:ECHO) CEO Martin Hull joins DirectorsTalk Interviews to discuss successfully raising £0.6 million in an oversubscribed placing. Martin shares his thoughts on the news, provides more detail on the restructuring, the next step with the bonds, Martins

Echo Energy

Echo Energy raises £0.6 million through oversubscribed placing

Echo Energy plc (LON:ECHO), the Latin American focused upstream oil and gas company, has announced the results of the Placing, further to the Company’s announcement released at 5.02 p.m. on 12 August 2022. Capitalised terms used but not defined

Echo Energy

Oil rises nearly 2%

Oil prices rose nearly 2% on Monday in volatile trading, bouncing off multi-month lows touched last week, as positive economic data from China and the United States fed hopes for demand despite nagging fears of a recession. Brent

Echo Energy

Oil prices rise today

Oil prices rose on Friday, bouncing off their lowest levels since February in the previous session, as supply shortage concerns were enough to cancel out fears of slackening fuel demand. Brent crude rose 55 cents, or 0.6%, to

Echo Energy

Oil extends gains

Oil rose more than $1 a barrel on Thursday, extending gains from the previous session, buoyed by improved risk appetite among investors as lower crude inventories and a rebound in gasoline demand in the United States supported prices.

Echo Energy

Oil prices climb in Asia trading

Oil prices climbed in Asia trading on Friday, rebounding from previous declines amid supply tightness and geopolitical tensions, even though weakened demand in the US has cast a shadow on the market this week, according to Reuters. Brent

No more posts to show