Echo Energy PLC Commercial and Financial Update (6604O)
02 Febrero 2023 - 1:00AM
UK Regulatory
TIDMECHO
RNS Number : 6604O
Echo Energy PLC
02 February 2023
2 February 2023
Echo Energy plc
("Echo" or the "Company")
Commercial and Financial Update
Echo Energy, the Latin American focused energy company, is
pleased to provide 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, 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."
For further information, please contact:
Echo Energy via Vigo Consulting
Martin Hull, Chief Executive Officer
Vigo Consulting (IR & PR Advisor)
Patrick d'Ancona
Finlay Thomson +44 (0) 20 7390 0230
Cenkos Securities (Nominated Adviser)
Ben Jeynes
Katy Birkin +44 (0) 20 7397 8900
Zeus Capital Limited (Corporate Broker)
Simon Johnson (Corporate Broking)
John Llewellyn-Lloyd (Corporate Finance) +44 (0) 20 3829 5000
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.
MMscf/d means million standard cubic feet of gas per day and
Mmbtu means million British thermal units.
Certain of the information contained within this announcement is
deemed by the Company to constitute inside information as
stipulated under the Market Abuse Regulation (EU 596/2014) pursuant
to the Market Abuse (Amendment) (EU Exit) Regulations 2018. Upon
the publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
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END
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