Echo Energy plc (LON:ECHO), the Latin American focused upstream energy company, has announced that AIM Regulation has granted the Company an additional period of up to two months to publish its annual audited accounts for the year ended 31 December 2021. The Company must therefore publish its annual audited accounts for the year ended 31 December 2021 by 31 August 2022 but will endeavour to do so as soon as possible.
This additional period is in view of the adverse impact of COVID-19 having resulted in delays in the ability of the local Argentinian Santa Cruz Sur joint venture entity in which Echo holds a 70% interest (the “SCS JV”) to provide information to its Argentinian auditor. As a result, the Argentinian auditor has been delayed in the finalisation of the SCS JV audit, which the Company now expects to be concluded during July 2022. The Company remains in constant dialogue with both the Argentinian auditor and Echo’s UK auditor to seek to conclude and publish the 2021 Annual Report as soon as is possible.
The Company is also pleased to provide a production and commercial update regarding its Santa Cruz Sur assets, onshore Argentina, where production during the period from 1 January 2022 to 18 June 2022 reached an aggregate of 243,230 boe net to Echo during the period, including 44,905 bbls of oil and condensate and 1,190 MMscf of gas.
Net liquids production in Q2 to 18 June 2022 averaged a 267 bopd, a slight increase on Q1 levels despite a 35-day maintenance and upgrade programme on the Oceano field during Q2, when oil and gas production from the field was temporarily brought offline.
Net gas production averaged 6.7 MMscf/d in Q2 to 18 June 2022, a reduction compared to the Q1 2022 figure of 7.4 MMscf/d as a result of the Oceano field production being brought temporarily offline for maintenance and upgrades to the compressor and associated infrastructure.
Production from Oceano remains strong and with production increases remaining sustainable. In the 40 days post-maintenance commissioning, production from Oceano average 2.15 MMscf/d, representing an increase of 46% in daily gas production at Oceano when compared to the 40-day period immediately prior to maintenance operations.
Gas sold since the start of May 2022 has been sold under the new 2022-2023 contracts announced by the Company on 3 May 2022, with flexibility to capitalise on periods of attractive spot pricing. In May, gas revenue net to Echo (inclusive of VAT) is expected to be c.US$1.0m, an increase of more than 160% over gas sales in April.
Total liquid sales net to Echo in 2022 to 23 June were 45,847 bbls. In Q2 2022 an additional new customer signed an agreement to purchase liquids from the Company, providing further sales options and competitive leverage in the domestic market. In May total net liquids revenue was c.US$0.4m.
It is anticipated that these increased revenues over the course of the annual gas contracts are capable of being applied towards the acceleration of the Company’s operational programme to increase production whilst also being applied to the outstanding Santa Cruz Sur Joint Venture historical creditor balances. As of 30 April 2022, this SCS JV current liabilities were estimated (unaudited) at US$13.9m gross (US$9.7m net to Echo’s 70% interest). This is slightly up compared with the (unaudited) balances at 31 Dec 2021 of US$13.8m (US$9.6m net to Echo’s 70% interest). The Santa Cruz Sur Joint Venture balances are prior to Argentinian VAT credits due to the Company.
The Company’s cash balances as at 30 April 2022 stood at c.US$1.6 million (including US$1.0 million of Echo’s 70% interest of SCS JV cash balances in Argentina). Echo’s consolidated cash position as at 31 December 2021 was US$0.9m, up 28% from US$0.6m as at 31 December 2020.
Whilst remaining subject to audit, the Echo Energy confirms that it expects to report revenues for the year ended 31 December 2021 of US$11.1m (2020: US$11.1m) and net long-term debt of US$29.0m as at 31 December 2021 (2020: $30.0m). As announced by the Company on 14 January 2022, total 2021 cumulative production from Santa Cruz Sur net to Echo’s 70% interest in the Santa Cruz Sur assets was 567,370 boe (including 2,920 MMscf of gas).
