TIDMECHO
RNS Number : 2489B
Echo Energy PLC
30 September 2022
30 September 2022
Echo Energy plc
("Echo" or "the Company")
Interim Results
Echo Energy, the Latin American focused upstream energy company,
announces 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 (H1 2021: US$5.9 million)
-- Secured new gas contracts for 2022-2023 significantly above the 2021 annual pricing
-- Total net aggregate H1 2022 production of 261,290 boe,
including 48,600 bbls of oil and condensate and 1,280 MMscf of
gas
-- Continued to prioritise production opportunities with swift
payback, a key component of the Group's overarching growth
strategy
Post Period-End Highlights
-- Agreement by the Santa Cruz Sur partners to a production and
infrastructure enhancement plan to materially increase Santa Cruz
Sur production by c.40% above average H1 2022 production levels
-- Post period fundraising and conditional debt restructuring
Echo Energy plc Via Vigo Communications Ltd
Martin Hull, Chief Executive
Officer
Cenkos Securities plc (Nominated Tel: 44 (0)20 7397 8900
Adviser)
Ben Jeynes
Katy Birkin
Vigo Consulting Ltd (IR/PR Tel: 44 (0)20 7390 0230
Advisor)
Patrick d'Ancona
Chris McMahon
Arden Partners plc (Corporate Tel: 44 (0)20 7614 5900
Broker)
Simon Johnson (Corporate Broking)
John Llewellyn-Lloyd (Corporate
Finance)
Certain of the information communicated within this announcement
is deemed to constitute inside information for the purposes of
Article 7 of EU Regulation 596/2014 (as amended), which forms part
of domestic UK law pursuant to the European Union (Withdrawal) Act
2018 . Upon the publication of this announcement, this inside
information is now considered to be in the public domain.
Chairman and Chief Executive Officer's Statement
In the six months ended 30 June 2022, despite a number of legacy
challenges resulting from the pandemic, the Company has taken clear
steps forward, underpinned by considerable operational and
commercial progress. Echo has continued to bolster its financial
foundations, facilitating the development of cashflow enhancing
rapid return production opportunities, which remains a a key
component of the Group's long-term growth strategy.
The successful negotiation of the new premium priced gas sales
agreements, coming into effect in May 2022, are expected to
underpin significantly increased gas revenues from the Santa Cruz
Sur asset base. T he additional cashflows which will be delivered
from the Santa Cruz Sur Enhancement Plan announced post period-end
will enable the Company to broaden the scope of choices available
to bring additional reserves and resources into production from the
many opportunities the portfolio presents.
Amid the current favourable macro environment and with the
potential debt restructuring on the horizon, Echo remains
well-placed to evolve its existing portfolio. Whilst the Santa Cruz
Sur assets remain a strategic priority, Echo is also pursuing
additional business development opportunities across the full
energy spectrum in Latin America, aimed at enhancing the Company's
reputation as a leading sector player in the wider region.
Progress on Production
Echo is highly focused on delivering near term production
increases following the prudent financial stabilisation of the
business across 2020 and 2021, and the normalisation of operating
and trading conditions, albeit against a strong commodity price
backdrop, across the energy sector as the impact of the Covid-19
pandemic continues to ease.
In April 2022, the compressor at the Santa Cruz Sur assets was
successfully upgraded, and important maintenance was performed
whilst the Oceano field was temporarily shut-in. This was a
significant and planned operational milestone and the programme has
delivered on its target of substantially increasing production from
the Santa Cruz Sur assets since the compressor was brought back
online, with the full impact expected to be seen in future
production figures. Post period additional work at a number of
fields has been undertaken to improve power generation capacity as
part of the production enhancement plan, and these efforts
continue.
Production over H1 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.
Concurrently, net liquids production in Q2 2022 averaged 272 bopd,
an increase over Q1 levels (Q1 2022: 265 bopd) despite the 35-day
maintenance and upgrade programme on the Oceano field during the
quarter.
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.
Successful Execution of Sales Contracts at Premium Prices
In May 2022, Echo extended its customer footprint, securing two
new gas sales contracts ("the Contracts") at significant premiums
to 2021 contracted rates. The Contracts reflect the strong
competition amongst customers to secure gas supplies from the
Company for the coming year.
Alongside providing the Group with further sales options and
flexibility as Echo focuses on increasing competition and prices
for specific products, the Contracts demonstrate the continued
implementation of the Company's strategy to leverage the strong
upswing in global commodity prices whilst seeking to underpin gas
sales from Santa Cruz Sur under secure long-term supply agreements
where appropriate.
The Contracts have a term of 12 months, with gas sales under the
Contracts beginning in May 2022, and provide for a 65% increase in
pricing over average annual contract pricing previously achieved by
the Company in March 2021 and a 116% increase on the current summer
pricing until end April 2022 under those same March 2021 contracts.
Only 2 months of the higher gas revenues under the new contracts is
reflected in the interim accounts for the 6 months to 30 June,
however, they now create a much more positive outlook for revenue
growth in the next 12 month period.
Financial
The Group posted a Gross Loss of US $1.0 million for the six
month period ended June 2020 compared to a profit of US $0.4
million for the comparable period in 2021. Growing production costs
are attributable to general inflationary increases and additional
expenditure required to get operations back to a more normal
environment following the pandemic.
Total revenue for the period was US $6.2 million (H1 2020: US $
5.9 million), and comprised of US $2.5 million of Oil sales and US
$3.7 million of Gas sales.
Financial income of US $2.2 million and was almost entirely the
net foreign exchange gains. Finance expense of US $1.8 million for
H1 2022 (H1 2020: US $ 3.3 million) and comprised primarily of US
$1.3 million unwinding of discount on long term loans..
Total comprehensive loss for the Group for the 6 month period
ending 30 June 2022 was US $2.0 million (H1 2020: US $ 1.5
million)
The Company's cash balance as at 30 June 2022 was US $1.3
million, compared to $0.7 million balance as at 31 December
2021.
Post Period-End Highlights
Post period-end, the Group has continued to build on the
positive momentum generated in H1 2022 following the agreement of
new gas sales contracts, focusing on proving up the Santa Cruz Sur
assets which provide Echo with material production and revenues
from a strong reserves base as well as the potential for exciting
higher impact projects.
In July 2022, the Santa Cruz Sur joint venture partners agreed
to a detailed plan to materially increase production at Santa Cruz
Sur by approximately 40% from the levels previously achieved over
H1 2022, as well as to improve the quality of sales liquids from
the Santa Cruz Sur assets (the "Enhancement Plan"). 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.
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.
Echo successfully installed all three additional power
generation units on schedule in the respective fields over August
2022, a key pillar of the Enhancement Plan, with the unit installed
in the larger Cerro Molino Oeste field commissioned and available
to support existing and future production levels. The Group is
planning on delivering upgrades to the workover rig owned by the
Santa Cruz joint venture, including an overhaul of the hydraulic
system and the blowout preventer stack.
Conditional Debt Restructuring and Fundraising
On 12 August 2022, the Company announced the conditional
conversion of an aggregate of EUR15.0 million of existing debt
principal, together with accrued interest thereon, into new
Ordinary Shares - the significant majority of which is proposed to
be converted into new Ordinary Shares at a price of 0.45p. In doing
so, the Company also confirmed that it would be proposing a
conditional reduction of the coupon on the remaining EUR10.0
million of Euro Note debt (the "Notes") from 8% to 2% with
suspension of further cash interest payments for two years and an
extension on maturity on the remaining Notes to 2032.
The Company subsequently announced publication of its proposals
to restructure the Notes on 5 September 2022. The debt
restructuring remains conditional on both the approval of the
holders of the Note and on the approval of the Company's
shareholders. The changes are aimed at comprehensively
restructuring and strengthening the Company's balance sheet and
accelerating growth.
On 14 August 2022, the Company was also pleased to confirm that
it had successfully raised GBP600,000 (before expenses) pursuant to
a placing of new ordinary shares. The net proceeds of this placing
provided the Group with additional resources to fund working
capital, including expenses related to the proposed debt
restructuring, and enable operating cashflows in Argentina to be
focused on activities in country in the near term, including the
plan to increase production by c. 40% over approximately the next
six months.
Outlook
H1 2022 was a productive period for the Group, as we
consolidated our asset base in Latin America with significant long
term commercial agreements and continued solid output from key
licences.
Against the backdrop of strong global commodity prices, the
Company has delivered on its key aspirations for the period,
accelerating its strategy to deliver organic growth from the Santa
Cruz Sur assets, which present material low - risk production
upside and has the potential to providing potential additional
benefits to all stakeholders.
Looking ahead, management is confident of the Group's growth
prospects as we continue to unlock the potential of Santa Cruz Sur,
identify further commercial opportunities, and strive to deliver
the important conditional debt restructuring announced in August
this year.
James Parsons Martin Hull
Chairman Chie f Executive Office
Consolidated Statement of Comprehensive Income
Period ended 30 June 2022
Unaudited Unaudited Audited
1 January 2022 1 January 2021 Year to
30 June 2022 30 June 2021 31 December
2021
Notes US $ US $ US $
--------------------------------- ------- ----------------- ---------------- -------------
Continuing operations
Revenue 3 6,230,288 5,891,413 11,124,487
Cost of sales 4 (7,256,796) (5,497,993) (15,147,779)
--------------------------------- ------- ----------------- ---------------- -------------
Gross (loss)/profit (1,026,508) 393,420 (4,023,292)
Exploration expenses (143,545) (45,807) (205,651)
Administrative expenses (1,125,073) (1,492,010) (2,965,548)
Operating loss (2,295,126) (1,537,817) (7,194,491)
Financial income 5 2,161,898 3,140,024 4,355,334
Financial expense 6 (1,834,643) (3,287,229) (8,993,432)
Derivative financial gain/
(loss) 7 - 17,575 62,477
--------------------------------- ------- ----------------- ---------------- -------------
Loss before tax (1,967,871) (1,274,027) (11,770,112)
Taxation 8
--------------------------------- ------- ----------------- ---------------- -------------
Loss from continuing operations (1,967,871) (1,274,027) (11,770,112)
Loss for the period (1,274,027) (11,770,112)
Other comprehensive income:
Exchange difference on
translating foreign operations 26,834 (177,930) 211,820
--------------------------------- ------- ----------------- ---------------- -------------
Total comprehensive loss ( 11,558,292
for the period (1,941,036) (1,451,957) )
--------------------------------- ------- ----------------- ---------------- -------------
Loss attributable to: Owners ( 11,558,292
of the parent (1,941,036) (1,451,957) )
--------------------------------- ------- ----------------- ---------------- -------------
Total comprehensive loss
attributable to: Owners ( 11,558,292
of the parent (1,941,036) (1,451,957) )
--------------------------------- ------- ----------------- ---------------- -------------
Loss per share (cents) 9
Basic (0.14) (0.10) (0.93)
--------------------------------- ------- ----------------- ---------------- -------------
Diluted (0.14) (0.10) (0.93)
--------------------------------- ------- ----------------- ---------------- -------------
Loss per share (cents)
for continuing operations
Basic (0.14) (0.10) (0.93)
--------------------------------- ------- ----------------- ---------------- -------------
Diluted (0.14) (0.10) (0.93)
--------------------------------- ------- ----------------- ---------------- -------------
The notes form an integral part of these financial
statements.
Consolidated Statement of Financial Position
Period ended 30 June 2022
Unaudited Unaudited Audited
1 January 1 January Year to
2022 2021
30 June 30 June 2021 31 December
2022 2021
Notes US $ US $ US $
------------------------------------- ------- -------------- -------------- --------------
Non-current assets
Property, plant and equipment 10 2,668,770 2,516,805 2,674,405
Other intangibles 11 6,662,805 7,773,210 7,131,907
9,331,575 10,290,015 9,806,312
Current Assets
Inventories 1,415,225 438,014 1,365,225
Other receivables 3,566,742 5,846,670 2,108,438
Cash and cash equivalents 12 1,314,969 945,488 742,339
------------------------------------- ------- -------------- -------------- --------------
6,296,936 7,230,172 4,216,002
Current Liabilities
Trade and other payables (19,511,235) (10,075,368) (16,023,500)
Derivatives and other liabilities - (44,885) -
(19,511,235) (10,120,253) (16,023,500)
Net current assets (13,214,299) (2,890,081) (11,807,498)
------------------------------------- ------- -------------- -------------- --------------
Total assets less current
liabilities (3,882,724) 7,399,934 (2,001,186)
Non-current liabilities
Loans due in over one year 15 (28,031,316) (28,162,903) (28,768,380)
Provisions (3,039,911) (2,959,976) (3,039,911)
(31,071,227) (31,122,879) (31,808,291)
Total Liabilities (50,582,462) (41,243,132) (47,831,791)
------------------------------------- ------- -------------- -------------- --------------
Net Assets (34,953,951) (23,722,945) (33,809,477)
------------------------------------- ------- -------------- -------------- --------------
Equity attributable to
equity holders of the parent
Share capital 13 7,686,151 7,135,082 7,209,086
Share premium 14 64,884,556 64,748,942 64,977,243
Warrant reserve 12,589,970 12,188,032 12,177,786
Share option reserve 1,522,499 1,570,827 1,522,499
Foreign currency translation
reserve (3,504,752) (3,141,836) (3,531,587)
Retained earnings (118,132,375) (106,223,992) (116,164,504)
------------------------------------- ------- -------------- -------------- --------------
Total Equity (34,953,951) (23,722,945) (33,809,477)
------------------------------------- ------- -------------- -------------- --------------
The notes form an integral part of these financial
statements.
Consolidated Statement of Changes in Equity
Period ended 30 June 2022
Foreign
Share currency
Retained Share Share Warrant option translation
earnings capital premium reserve reserve reserve Total equity
US $ US $ US $ US $ US $ US $ US $
-------------------- -------------- ---------- ----------- ----------- ---------- ------------- ---------------
1 January 2022 (116,164,504) 7,209,086 64,977,243 12,177,786 1,522,499 (3,531,587) (33,809,477)
Loss for the period (1,967,871) - - - - - (1,967,871)
Exchange Reserve - - - - - 26,835 26,835
-------------------- -------------- ---------- ----------- ----------- ---------- ------------- ---------------
Total comprehensive
loss for the
period (1,967,871) - - - - 26,835 (1,941,036)
Warrants issued - 433,696 400,735 - - - 834,431
Warrants exercised - - - - - - -
Share issue - - (412,184) 412,184 - - -
Transaction costs - 43,369 (81,238) - - - (37,869)
30 June 2022 (118,132,375) 7,686,152 64,884,556 12,589,970 1,522,499 (3,504,752) (34,953,951)
-------------------- -------------- ---------- ----------- ----------- ---------- ------------- ---------------
1 January 2021 (104,772,035) 6,288,019 64,961,905 11,373,966 1,417,285 (3,319,767) (24,050,627)
Loss for the period (1,274,027) - - - - - (1,274,027)
Exchange Reserve (177,930) - - - - 177,930 -
-------------------- -------------- ---------- ----------- ----------- ---------- ------------- ---------------
Total comprehensive
loss for the
period (1,451,957) - - - - 177,930 (1,274,027)
Warrants issued - (814,066) 814,066 - - -
Warrants exercised - 274,803 86,122 - - - 360,925
Share issue - 572,260 595,153 - - - 1,167,413
Transaction Costs (80,171) - - - (80,171)
Share options - - - - - - -
lapsed
Share-based
payments - - - - 153,542 - 153,542
-------------------- -------------- ---------- ----------- ----------- ---------- ------------- ---------------
30 June 2021 (106,223,992) 7,135,082 64,748,943 12,188,032 1,570,827 (3,141,837) (23,722,925)
-------------------- -------------- ---------- ----------- ----------- ---------- ------------- ---------------
1 January 2021 (104,772,035) 6,288,019 64,961,905 11,373,966 1,417,285 (3,319,767) (24,050,627)
Loss for the year (11,558,292) (11,558,292)
Exchange Reserve (211,820) (211,820)
Total comprehensive
loss for the year (11,558,292) 0 0 0 0 (211,820) (11,770,112)
New shares issued - 646,265 813,207 - - - 1,459,472
Warrants - 274,803 105,484 (19,362) - - 360,925
Warrants exercised - - (823,182) 823,182 - - -
Share issue costs - - (80,171) - - - (80,171)
Share options
lapsed 165,824 - - - (165,824) - -
Share-based
payments - - - - 271,038 - 271,038
-------------------- -------------- ---------- ----------- ----------- ---------- ------------- ---------------
31 December 2021 (116,164,504) 7,209,086 64,977,243 12,177,786 1,522,499 (3,531,587) (33,809,477)
-------------------- -------------- ---------- ----------- ----------- ---------- ------------- ---------------
The notes form an integral part of these financial
statements.
Consolidated Statement of Cash Flows
Period ended 30 June 2022
Unaudited Unaudited
1 January 1 January Year to
2022 2021
30 June 30 June 31 December
2022 2021 2021
US $ US $ US $
------------------------------------------ ------------ --------------- --------------
Cash flows from operating activities
Loss from continuing operations (1,967,871) (1,274,027) (11,770,112)
(1,967,871) (1,274,027) (11,770,112)
Adjustments for:
Depreciation and depletion of
property, plant and equipment 8,449 35,887 127,656
Depreciation and depletion of
intangible assets 503,706 738,412 1,498,431
(Gain)/Loss on disposal of property,
plant and equipment - - 1,858
Share-based payments - 153,542 271,038
Financial income (2,161,898) (3,140,024) (4,355,334)
Financial expense 1,834,643 3,287,229 8,993,432
Exchange difference (171,072) (1,656,272) (5,612,490)
Derivative financial gain - (17,575) (62,477)
------------------------------------------ ------------ --------------- --------------
13,828 (598,801) 862,114
Decrease/(Increase) in inventory (50,000) 103,215 (823,995)
Decrease/(Increase) in other receivables 657,790 1,700,723 5,120,825
(Decrease)/increase in trade and
other payables 1,371,642 (1,020,415) 5,072,974
------------------------------------------ ------------ --------------- --------------
1,979,432 783,523 9,369,804
Net cash used in operating activities 25,389 (1,089,305) (1,538,194)
Cash flows from investing activities
Purchase of intangible assets (34,604) - (118,716)
Purchase of property, plant and
equipment (2,813) - (251,226)
------------------------------------------ ------------ --------------- --------------
Net cash used in investing activities (37,417) (369,942)
Cash flows from financing activities
Interest received 26 166,820 249,351
Bank Fees and other finance cost (42,276) (63,136) (169,991)
Issue of share capital 834,430 958,513 1,459,472
Share issue costs (37,867) (80,171) (80,171)
Warrant exercise - 360,925 360,925
------------------------------------------ ------------ --------------- --------------
Net cash from financing activities 754,313 1,342,951 1,819,586
------------------------------------------ ------------ --------------- --------------
Net (decrease)/increase in cash
and cash equivalents 742,286 253,646 (88,550)
Cash and cash equivalents at
the beginning of the period 742,339 682,159 682,159
------------------------------------------ ------------ --------------- --------------
Foreign Excahnge gains(losses)
on cash and cash equivalents (169,655) 9,683 148,730
------------------------------------------ ------------ --------------- --------------
Cash and cash equivalents at
the end of the period 1,314,969 945,488 742,339
------------------------------------------ ------------ --------------- --------------
The notes form an integral part of these financial
statements.
Notes to the Financial Statements
Period ended 30 June 2022
1. Accounting Policies
General Information
These financial statements are for Echo Energy plc ("the
Company") and subsidiary undertakings ("the Group"). The Company is
registered, and domiciled, in England and Wales and incorporated
under the Companies Act 2006.
Basis of Preparation
The condensed and consolidated interim financial statements for
the period from 1 January 2022 to 30 June 2022 have been prepared
in accordance with International Accounting Standards ("IAS") 34
Interim Financial Reporting, and on the going concern basis. They
are in accordance with the accounting policies set out in the
statutory accounts for the year ended 31 December 2021 and are
expected to be applied for the year ended 31 December 2022.
The comparatives shown are for the period 1 January 2021 to 30
June 2021, and 31 December 2021 and 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 2021.
A copy of the Company's statutory accounts for the year ended 31
December 2021 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.
Despite the consolidated statement of financial position showing
a negative net asset position at 30 June 2022, the outlook for the
Group has materially changed.
2022 continues to be a year of financial stabilisation, progress
and improvement, particularly driven by a marked increase in energy
commodity prices, following the worst impacts of the COVID 19
pandemic in 2020. The successful restructuring of all the Company's
loans during 2021 and post period in 2022 means that minimal cash
servicing of these loans is required during 2022 materially
improving the cashflow outlook and enabling greater investment on
increasing production levels further improving revenues. Post
period the improvement has continued. The Company has executed new
gas sales agreements for the majority of its gas production.
Average Gas prices in July 2022 are US$4.53 (mmbtu) and Liquids
(m3) sell at US$51 in July 2022.
Agreements with customers allowing for a prepayment receipt of
$1.6m in April 2022, in combination with a revenue increase in cash
receipts from June 2022 has alleviated the immediate creditor
concern in Argentina, whilst the additional share offering has
raised further funds in the UK.
However, financial challenges remain ahead for the Company as it
emerges and recovers from the impact of the covid pandemic and
whilst the Company forecast the SCS assets to be cashflow positive
at prevailing oil and gas price levels in the long term, there is
still a short term requirement for additional funding through debt
financing, joint venture equity or share issues. These conditions
indicate the existence of a material uncertainty which may cast
significant doubt about the Company's ability to continue as a
going concern. The directors have formed a judgement based on
Echo's proven success in raising capital and a review of the
strategic options available to the group, that the going concern
basis should be adopted in preparing the financial statements.
The directors have formed a judgement based on Echo's proven
success in raising capital and a review of the strategic options
available to the Group, that the going concern basis should be
adopted in preparing the Condensed Interim Consolidated 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 this 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 consolidated financial statements
for the year ended 31 December 2021. The key sources of uncertainty
in estimates that have a significant risk of causing material
adjustment to the carrying amounts of assets and liabilities,
within the next financial year, are the Group's going concern
assessment.
Revenue Recognition
Revenue comprises the invoice value of goods and services
supplied by the Group, net of value added taxes and trade
discounts. Revenue is recognised in the case of oil and gas sales
when goods are delivered and title has passed to the customer. This
generally occurs when the product is physically transferred into a
pipeline or vessel. Echo recognised revenue in accordance with IFRS
15. We have a contractual arrangement with our joint venture
partner who markets gas and crude oil on our behalf. Gas is
transferred via a metred pipeline into the regional gas
transportation system, which is part of the national transportation
system, control of the gas is transferred at the point at which the
gas enters this network, this is the point at which gas revenue is
recognised. Gas prices vary from month to month based on seasonal
demand from customer segments and production in the market as a
whole. Our partner agrees pricing with their portfolio of gas
clients based on agreed pricing mechanisms in multiple contracts.
Some pricing is regulated by government such as domestic supply.
Echo receive a monthly average of gas prices attained. Oil
shipments are priced in advance of a cargo and revenue is
recognised at the point at which cargoes are loaded onto a shipping
vessel at terminal.
2. Business Segments
The Group has adopted IFRS 8 Operating Segments. Per IFRS 8,
operating segments are regularly reviewed and used by the board of
directors being the chief operating decision maker for strategic
decision-making and resources allocation, in order to allocate
resources to the segment and assess its performance.
The Group's reportable operating segments are as follows:
a. Corporate and Administrative
b. Santa Cruz Sur c . Bolivia
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. Reportable
segments are based around licence activity, although the reportable
segments are reflected in legal entities, certain corporate costs
collate data across legal entities and the segmental analysis
reflects this.
Information regarding each of the operations of each reportable
segment within continuing operations is included in the following
table.
All revenue, which represents turnover, arises within Argentina
and relates to external parties:
Corporate Santa Bolivia Total
& Administrative Cruz Sur
US $ US $ US $ US $
Period to 30 June 2022
Revenues 86 6,230,201 - 6,230,288
Cost of sales (7,256,796) - (7,256,796)
Exploration expense (143,545) - - (143,545)
Administration expense (737,067) (372,609) (15,396) (1,125,073)
Financial income 2,161,872 26 - 2,161,898
Financial expense (1,363,845) (470,525) (272) (1,834,643)
------------------------ ------------------ ------------- ---------- -------------
Depreciation (4,445) (4,004) - (8,449)
Income tax
------------------------ ------------------ ------------- ---------- -------------
Loss before tax (82,500) (1,869,704) (15,668) (1,967,871)
Non-current assets 1,902,102 7,980,917 (551,445) 9,331,575
Assets 2,072,637 14,040,306 (484,432) 15,628,511
Liabilities (28,685,308) (21,874,676) (22,477) (50,582,462)
Parent Corporate Santa
Company Santa Tapi Bolivia Consolidation Total & Cruz Sur Tapi Bolivia Total
US $ Cruz Sur Aike US $ US $ US $ Administrative US $ Aike US US $
US $ US $ US $ US $ $
Period to 30 June 2021
Revenues - 5,891,413 - - 5,891,413
Cost of sales - (5,497,993) - (5,497,993)
Exploration expense (45,807) - - (45,807)
Administration expense (1,332,349) (113,839) (48,928) (115,043) (1,610,158)
Impairment of intangible - - - - -
assets
Impairment of property, - - - - -
plant and equipment
Financial income 2,898,300 77,101 164,616 - 3,140,024
Financial expense (1,823,398) (898,236) (467,375) (61) (3,186,081)
------------------------------------------------------------------------ ---------------- ------------ ------------ ---------- -------------
Depreciation 17,592 - - - 17,592
Income tax - - - - -
------------------------------------------------------------------------ ---------------- ------------ ------------ ---------- -------------
Loss before tax (285,662) (541,554) (351,687) (115,104) (1,262,545)
Non-current assets 28,792,797 4,740,757 3,362,308 (453,174) 36,442,688
Assets 28,940,599 9,214,984 5,947,869 (413,628) 43,689,824
Liabilities (28,816,764) (7,943,328) (4,421,895) (81,125) (41,263,112)
Consolidation adjustments in respect of assets relate to the
impairment of intercompany assets .
Depreciation is included in administration expenses
The geographical split of non-current assets arises as
follows:
United
Kingdom South America Total
US $ US $ US $
------------------------------- --------- ---------------- ----------
30 June 2022
Property, plant and equipment 1 2,668,769 2,668,770
Other intangible assets 480,189 6,182,616 6,662,805
------------------------------- --------- ---------------- ----------
30 June 2021
Property, plant and equipment 2,457 2,514,348 2,516,805
Other intangible assets 326,869 7,446,341 7,773,210
------------------------------- --------- ---------------- ----------
3. R evenue
Unaudited Unaudited Audited
1 January 1 January Year to
2022 - 2021 - 31 December
30 June 2022 30 June 2021 2020
US $ US $ US $
Oil revenue 2,514,419 2,024,421 4,060,802
Gas revenue 3,715,668 3,833,857 7,036,861
Other Income 201 33,135 26,824
Total Revenue 6,230,288 5,891,413 11,124,487
--------------- -------------- -------------- -------------
4. Cost of Sales
Unaudited Unaudited Audited
1 January 1 January Year to
2022 - 2021 - 31 December
30 June 30 June 2021 2021
2022 US $ US $
US $
Production costs 5,870,851 3,794,486 12,024,454
Selling and distribution
costs 928,235 863,065 1,684,320
Movement in stock of crude
oil (50,000) 72,239 (181,274)
Depletion 507,710 768,203 1,620,279
Total Costs 7,256,796 5,497,993 15,147,779
---------------------------- ----------- -------------- -------------
5. Finance Income
Period to Period to Year to
30 June 30 June 2021 31 December
2022 US$ 2021
US $ US $
---------------------------- ---------- -------------- -------------
Interest income 340 241,716 249,351
Net foreign exchange gains 2,161,558 2,898,308 4,105,983
Total 2,161,898 3,140,024 4,355,334
---------------------------- ---------- -------------- -------------
6. Financial Expense
Period to Period to Year to
30 June 30 June 2021 31 December
2022 US$ 2021
US $ US $
------------------------------------ ---------- -------------- -------------
Interest payable 227 11,912 11,912
Net foreign exchange losses 432,660 1,242,035 5,122,810
Unwinding of discount on
long term loan 1,272,735 1,691,248 3,394,647
Amortisation of loan fees 86,745 119,526 234,101
Unwinding of abandonment
provision - 19,980 59,955
Bank fees and overseas transaction
taxes 42,276 202,528 170,007
------------------------------------ ---------- -------------- -------------
Total 1,834,643 3,287,229 8,993,432
------------------------------------ ---------- -------------- -------------
7. Derivative Financial Gain/Loss
Period Period Year to
to to 31 December
30 June 30 June 2021
2022 2021 US $
US $ US $
----------------- ---------- --------- -------------
Fair value gain - 17,575 62,477
----------------- ---------- --------- -------------
Total - 17,575 62,477
----------------- ---------- --------- -------------
Represents fair value gain on valuation of derivatives
instruments at period end.
8. Taxation
The Group has tax losses available to be carried forward in
certain subsidiaries and the parent company. 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 2022,
or in the six months period to June 2021, or the year to 31
December 2021.
9. Loss Per Share
The calculation of basic and diluted loss per share at 30 June
2021 was based on the loss attributable to ordinary shareholders.
The weighted average number of ordinary shares outstanding during
the period ending 30 June 2021 and the effect of the potentially
dilutive ordinary shares to be issued are shown below.
Period to Period to Year to
30 June 30 June 31 December
2022 2021 2021
----------------------------------- -------------- -------------- --------------
Net loss for the year (US $) (1,967,871) (1,274,027) (11,770,112)
----------------------------------- -------------- -------------- --------------
Basic weighted average ordinary
shares in issue during the
year 1,440,666,214 1,236,231,219 1,270,891,563
----------------------------------- -------------- -------------- --------------
Diluted weighted average ordinary
shares in issue during the
year 1,440,666,214 1,236,231,219 1,270,891,563
----------------------------------- -------------- -------------- --------------
Loss per share (cents)
Basic (0.14) (0.10) (0.93)
----------------------------------- -------------- -------------- --------------
Diluted (0.14) (0.10) (0.93)
----------------------------------- -------------- -------------- --------------
In accordance with IAS 33 and as the entity is loss making,
including potentially dilutive share options in the calculation
would be anti-dilutive. Deferred shares have been excluded from the
calculation of loss per share due to their nature.
10. Property, Plant and Equipment
PPE - O&G
Properties Fixtures
US $ & Fittings Total
US $ US $
------------------ ------------ ------------- ------------
30 JUNE 2022
Cost
1 January 2022 2,873,147 95,397 2,968,544
Additions - 2,813 2,813
Disposals - - -
------------------ ------------ ------------- ------------
30 June 2022 2,873,147 98,210 2,971,357
------------------ ------------ ------------- ------------
Depreciation
1 January 2022 202,718 91,421 294,139
Charge for the
period 4,004 4,445 8,449
Disposals - - -
------------------ ------------ ------------- ------------
30 June 2022 206,722 95,866 302,588
------------------ ------------ ------------- ------------
Carrying amount
30 June 2022 2,666,425 2,344 2,668,769
------------------ ------------ ------------- ------------
30 JUNE 2021
Cost
1 January 2021 2,621,921 97,254 2,719,175
Additions - - -
Disposals - - -
------------------ ------------ ------------- ------------
30 June 2021 2,621,921 97,254 2,719,175
------------------ ------------ ------------- ------------
Depreciation
1 January 2021 79,941 86,542 166,483
Charge for the
period 29,790 6,097 35,887
Disposals - - -
------------------ ------------ ------------- ------------
30 June 2021 109,731 92,639 202,370
------------------ ------------ ------------- ------------
Carrying amount
30 June 2021 2,512,190 4,615 2,516,805
------------------ ------------ ------------- ------------
31 DECEMBER
2021
Cost
1 January 2021 2,621,921 97,254 2,719,176
Additions 251,226 - 251,226
Disposals (1,858) (1,858)
------------------ ------------ ------------- ------------
31 December 2021 2,873,147 95,397 2,968,544
------------------ ------------ ------------- ------------
Depreciation
1 January 2021 79,941 86,542 166,483
Charge for the
year 122,777 4,879 127,656
Disposals - - -
------------------ ------------ ------------- ------------
31 December 2021 202,718 91,421 294,139
------------------ ------------ ------------- ----------
Carrying amount
31 December 2021 2,541,980 3,976 2,674,405
------------------ ------------ ------------- ----------
31 December 2020 975,826 10,713 2,552,693
------------------ ------------ ------------- ----------
11. Intangible Assets
Argentina
Exploration
& Evaluation Total
US $ US $
------------------------------ -------------- -----------
30 June 2022
Cost
1 January 2022 10,875,022 10,875,022
Additions 34,604 34,604
Disposals - -
30 June 2022 10,909,626 10,909,626
------------------------------ -------------- -----------
Impairment
1 January 2022 3,743,115 3,743,115
Depletion 443,706 443,706
Depreciation decommissioning
assets 60,000 60,000
Impairment charge for - -
the period
30 June 2022 4,246,821 4,246,821
------------------------------ -------------- -----------
Carrying amount
30 June 2022 6,662,805 6,662,805
------------------------------ -------------- -----------
30 June 2021 7,773,210 7,773,210
------------------------------ -------------- -----------
30 JUNE 2021
Cost
1 January 2021 10,756,306 10,756,306
Additions - -
Disposals - -
------------------------------ -------------- -----------
30 June 2021 10,756,306 10,756,306
------------------------------ -------------- -----------
Impairment
1 January 2021 2,244,684 2,244,684
Depletion 415,912 415,912
Depreciation decommissioning
assets 322,500 322,500
Impairment charge for - -
the period
------------------------------ -------------- -----------
30 June 2021 2,983,096 2,983,096
------------------------------ -------------- -----------
Carrying amount
30 June 2021 7,773,210 7,773,210
------------------------------ -------------- -----------
30 June 2020 8,511,622 8,511,622
------------------------------ -------------- -----------
31 DECEMBER 2021
Cost
1 January 2021 10,756,306 10,756,306
Additions 118,716 118,716
Disposals - -
31 December 2021 10,875,022 10,875,022
------------------------------ -------------- -----------
Impairment
1 January 2021 2,244,684 2,244,684
Disposals - -
Depletion 1,375,931 1,375,931
Impairment charge for
the year 122,500 122,500
31 December 2021 3,743,115 3,743,115
------------------------------ -------------- -----------
Carrying amount
31 December 2021 7,131,907 7,131,907
------------------------------ -------------- -----------
31 December 2020 8,511,622 8,511,622
------------------------------ -------------- -----------
12 . Cash and Cash Equivalents
Period Period to
to 30 June 30 June 31 December
2022 2021 2021
US $ US $ US $
------------------------------------- ------------ ---------- --------------
Cash held by joint venture partners 54,604 190,974 500,719
Cash and cash equivalents 1,260,365 754,514 241,620
------------------------------------- ------------ ---------- --------------
Total 1,314,969 945,488 742,339
------------------------------------- ------------ ---------- --------------
Echo has advanced cash to its joint venture partner. The equity
share of the balance held is recognised
13. Share Capital
Period Period to
to 30 June 30 June 31 December
2022 2021 2021
US $ US $ US $
--------------------------------------- ------------ ---------- --------------
Issued, Called Up and Fully Paid
1,452,491,345 0.32c (June 2021:
1,298,813,085 0.32c) ordinary shares
1 January 2022 7,209,086 6,288,019 6,288,019
Equity shares issued 477,065 847,063 921,067
--------------------------------------- ------------ ---------- --------------
30 June / 31 December 7,686,151 7,135,082 7,209,086
--------------------------------------- ------------ ---------- --------------
The holders of 0.32c (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.
During the six month period to 30 June 2022, 143,478,260 share
were issued.
14. Share Premium Account
Period to Period to
30 June 2022 30 June 31 December
2021 2021
US$ US $ US $
------------------------------------ -------------- ----------- --------------
1 January 64,977,243 64,961,905 64,961,905
Premium arising on issue of equity
shares/warrants 400,735 595,153 813,207
Warrants Issued (412,184) (727,944) (717,698)
Transaction costs (81,238) (80,171) (80,171)
-------------- ----------- --------------
30 June 64,884,556 64,748,942 64,977,243
------------------------------------ -------------- ----------- --------------
15. Loans (due over 1 year)
Period Period
to 30 June to 30 June 31 December
2022 2021 2021
------------------------ ---------------- ----------------- -------------- -------------- --------------
Five-year secured
bonds (20,909,700) (20,907,802) (21,385,663)
Additional net
funding (5,871,466) (5,940,825) (6,059,126)
Other loans (1,250,150) (1,452,341) (1,323,591)
------------------------ ---------------- ----------------- -------------- -------------- --------------
Total (28,031,316) (28,300,968) (28,768,380)
------------------------ ---------------- ----------------- -------------- -------------- --------------
Amortised Repayment
Balance as finance charges of principle Exchange
at less cash adjustments 30 June
31 December interest US$ US $ 2022
2021 paid US$
US $ US $
------------------------ ---------------- ----------------- -------------- -------------- --------------
EUR 20 million five-year
secured bonds 21,895,166 1,276,611 - (1,861,485) 21,310,292
EUR5 million Lombard
Odier debt 6,187,142 314,160 - (523,425) 5,977,876
Other loans 1,323,591 69,495 - (142,936) 1,250,150
Loan fees (509,503) 63,642 - 45,269 (400,594)
Incremental loan
fees (128,016) 23,103 - (1,497) (106,410)
------------------------ ---------------- ----------------- -------------- -------------- --------------
Total 28,768,380 1,747,011 - (2,484,075) 28,031,316
------------------------ ---------------- ----------------- -------------- -------------- --------------
16. Subsequent Events
Operational Update
In July 2022, the Santa Cruz Sur joint venture partners agreed
to a detailed plan to materially increase production at Santa Cruz
Sur by approximately 40% from the levels previously achieved over
H1 2022, as well as to improve the quality of sales liquids from
the Santa Cruz Sur assets (the "Enhancement Plan"). 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.
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.
Echo successfully installed all three additional power
generation units on schedule in the respective fields over August
2022, a key pillar of the Enhancement Plan, with the unit installed
in the larger Cerro Molino Oeste field commissioned and available
to support existing and future production levels. The Group is
planning on delivering upgrades to the workover rig owned by the
Santa Cruz joint venture, including an overhaul of the hydraulic
system and the blowout preventer stack.
Conditional Debt Restructuring and Fundraising
On 12 August 2022, the Company announced the conditional
conversion of an aggregate of EUR15.0 million of existing debt
principal, together with accrued interest thereon, into new
Ordinary Shares - the significant majority of which is proposed to
be converted into new Ordinary Shares at a price of 0.45p. In doing
so, the Company also confirmed that it would be proposing a
conditional reduction of the coupon on the remaining EUR10.0
million of Euro Note debt (the "Notes") from 8% to 2% with
suspension of further cash interest payments for two years and an
extension on maturity on the remaining Notes to 2032.
The Company subsequently announced publication of its proposals
to restructure the Notes on 5 September 2022. The debt
restructuring remains conditional on both the approval of the
holders of the Note and on the approval of the Company's
shareholders. The changes are aimed at comprehensively
restructuring and strengthening the Company's balance sheet and
accelerating growth.
On 14 August 2022, the Company was also pleased to confirm that
it had successfully raised GBP600,000 (before expenses) pursuant to
a placing of new ordinary shares. The net proceeds of this placing
provided the Group with additional resources to fund working
capital, including expenses related to the proposed debt
restructuring, and enable operating cashflows in Argentina to be
focused on activities in country in the near term, including the
plan to increase production by c. 40% over approximately the next
six months.
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END
IR UKSBRUSUKUAR
(END) Dow Jones Newswires
September 30, 2022 02:00 ET (06:00 GMT)
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