Echo Energy South America operations Image source: KeyFacts Energy

Echo Energy plc, the Latin American focused upstream oil and gas company, announces the signature of a Letter of Intent ("LOI") to sign a new one year Technical Evaluation Agreement ("TEA") with YPFB (Yacimientos Petrolíferos Fiscales Bolivianos) over the Rio Salado licence area, onshore Bolivia. 

This LOI, signed at the first YPFB Bolivian Gas Forum in Santa Cruz Bolivia on 30 August 2018, will allow the exclusive agreement for the Company to continue the technical evaluation of the block over the coming year.  

The work programme will include the interpretation and integration of three 2D seismic lines, acquired  in 2015 / 2016, which transect part of the block and will be invaluable in definition of the deep multi-tcf structure mapped across the Rio Salado and Huayco blocks. 

At the end of the TEA period the Company will have the right to negotiate contract terms with YPFB across the licence area should it elect to do so.

The acquisition of an interest by Echo in Rio Salado remains contingent on final commercial terms being agreed. Accordingly the Company does not have an interest or the right to acquire any interest at this stage.

Separately Echo is pleased to announce that through agreement with its partner, Compañía General de Combustibles S.A. ("CGC"), it is to receive US$ for all sales of gas instead of Argentine Pesos to further reduce its exposure to the Peso. The gas sales remain denominated in US$ but had previously been settled in Pesos. All oil sales continue to be denominated in US$ with settlement for exported sales received in US$ whilst domestic sales are converted to and settled in Pesos. The Company's treasury policy is to hold all cash in GBP, USD and Euros, and as previously announced, the weakening currency results in a small net positive effect on the Company due to a fall in local operating costs.     

During the month of August Echo has sold approximately 71 million standard cubic feet of gas into the Argentinian market whilst a further 24 million standard cubic feet of gas produced at the wellhead has been utilised for fuel and power.Year to date average pricing across the customer base has been above $4.20/mmbtu through to July 2018. 

An export cargo of c. 9,450 barrels of oil net to Echo is waiting to be loaded from the Punta Loyola terminal, Rio Gallegos. A domestic sale of a further c. 6,400 barrels of oil net to Echo was completed earlier in August. Receipts for the combined oil sales are expected to be in the order of US$1 million.