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Echo Energy PLC

Echo Energy PLC - Santa Cruz Sur: Reserve and Resource Update

RNS Number : 1845P
Echo Energy PLC
08 June 2020
 

8 June 2020

 

Echo Energy plc

("Echo" or "the Company") 

 

Santa Cruz Sur: Reserve and Resource Update

 

Echo Energy, the Latin American focused upstream oil and gas company, provides the following update in respect of Company's internal estimates of reserves and resources attributable to Echo's 70% non-operated working interest in the producing Santa Cruz Sur blocks ("Santa Cruz Sur"), onshore Argentina, as at 31 December 2019.  In addition, Echo also provides further detail on an identified well workover programme and other production enhancement opportunities contained within the Santa Cruz Sur portfolio.

 

From 1 November 2019 to 31 December 2019 a total of 152,819 boe (consisting of 34,466 bbls of oil and 710.1 MMscf of gas) net to Echo was successfully produced from Santa Cruz Sur, at an average rate of a net 2,505 boepd. Production continued during Q1 2020 at an average net rate of 2,394 boepd.

 

The Company is pleased to confirm the identification of an initial portfolio of sixteen low cost workover and intervention operations at Santa Cruz Sur focussed on 1P proven developed non producing ("PDNP") and 2P reserve intervals - with the intention of bringing those volumes into production and, therefore, migrating the associated volumes to proven developed producing ("PDP") reserves. The cost of workover potentials identified is low, as compared to the cost of a new well, and given that the workovers sit in the developed part of the field, they are straight forward to bring online.

 

This initial portfolio of opportunities is part of a wider portfolio of Santa Cruz Sur workover and interventions, which includes further opportunities to increase production and reserves, currently being assessed by the Santa Cruz Sur partners.

 

Estimated Santa Cruz Sur Reserves as at 31 December 2019

 

Reflecting production from Santa Cruz Sur during 2019, the Company's estimates of Santa Cruz Sur reserves as at 31 December 2019 are as set out below.

 


Gross (100%)

Net attributable to

Echo's 70% working interest

1P

2P

3P

1P

2P

3P

PDP

PDNP

Total

PDP

PDNP

Total

Oil (MMbbls)

0.97

0.32

1.29

3.29

3.57

0.68

0.22

0.90

2.30

2.50

Gas (Bcf)

15.9

7.2

23.1

78.9

83.6

11.1

5.0

16.1

55.2

58.5

Total (MMboe)

3.80

1.60

5.40

17.34

18.47

2.66

1.12

3.78

12.14

12.93

 

Estimated Santa Cruz Sur Unrisked Prospective Resources as at 31 December 2019

 

Based on the  resource inventory as at 31 December 2019 of then operator of the Santa Cruz Sur assets, Roch S.A., which provides exploration potential in addition to already identified reserve-based projects at Santa Cruz Sur, the Company's estimates of Santa Cruz Sur prospective resources as at 31 December 2019 are detailed below. These volumes relate only to the the Palermo Aike area. Further work to assess prospective resources in all five Santa Cruz Sur blocks is ongoing and further disclosure to the market will be made, where appropriate, in the future.

 


Gross (100%)

Net attributable to Echo's 70% working interest

Risk Factor


Low Estimate

Best Estimate

High Estimate

Low Estimate

Best Estimate

High Estimate

%

Oil  (MMbbls)








Campo Limite area (Springhill)

0.50

1.41

3.94

0.35

0.99

2.76

70%

El Pedrero (Tobifera)

-

-

-

-

-

-

13%

Total oil

0.50

1.41

3.94

0.35

0.99

2.76

-

Gas  (Bcf)








Campo Limite area (Springhill)

13.4

34.1

97.4

9.4

23.9

68.2

70%

El Pedrero (Tobifera)

1.3

27.3

557.2

0.9

19.1

390.0

13%

Total gas

14.7

61.4

654.6

10.3

43.0

458.2

-

 

 

Workover Programme Update

 

The Company previously announced that the Eagle workover rig, owned by Echo and its partners in the Santa Cruz Sur assets, had been redeployed from Campo Limite to commence a standard programme of well interventions and maintenance and that the first well intervention being undertaken, in the Chorillos block, was assessing the production potential of bringing a historical well back online in a small field at Santa Cruz Sur. The Company confirmed that the expected new production potential of the currently non-producing well was estimated at 41 bopd when brought into production, following a swab test that produced a cumulative 280 bbls of oil over 48-hour period. This successful workover operation earlier this year provides confidence in pursuing further opportunities in the workover portfolio to increase production.

Echo is now pleased to confirm that in addition to the successful operation described above, an initial portfolio of sixteen workovers, focussed on seeking to bring PDNP & 2P reserves intervals into production, has now been matured. Of this portfolio of potential projects, four initial opportunities (consisting of 3 well workovers to bring associated PDNP 1P reserves into production and one project targeting 2P reserves) are estimated to be capable of adding expected combined  additional production of up to 4.8 MMscf/d of gas and 84 bopd (total combined additional production potential of 884 boepd). These 4 initial opportunities offer a combined estimated value of approximately US $9 million in NPV10 uplift based on an aggregate gross cost of approximately US $1 million and fast payback periods of between two to six months.  This uplift potential assumes a realised sales price of US $32/bbl and a gas price of US $3.5/mmbtu. The remaining twelve opportunities in the initial portfolio could each be capable of increasing gross production by up to 0.6 MMscf/d and 91 bbl/d. The Company continues efforts to identify and mature further production enhancement opportunities over and above the 16 already assessed to provide further growth and value to shareholders.

CEO Martin Hull commented:

"The addition of the important work in maturing the production enhancement opportunities recomfirms the flexibility and range of well-balanced risk-reward upside options contained within the Santa Cruz Sur portfolio. In addition to the existing revenue generating producing proved reserves, the combination of PDNP 1P and 2P production enhancement opportunities with exploration upside provides a diversified portfolio in a single set of assets at Santa Cruz Sur."

The Company will update on further developments when appropriate. A new presentation reviewing the Santa Cruz Sur opportunities will shortly be available on the Company website: www.echoenergyplc.com

The volumes included in this announcement are in accordance with SPE standards and 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 a Member of the Petroleum Exploration Society of Great Britain.

For further information, please contact:

 

Echo Energy

Martin Hull, Chief Executive Officer

 

via Vigo Communications

Vigo Communications (PR Advisor)

Patrick d'Ancona

Chris McMahon

 

+44 (0) 20 7390 0230

Cenkos Securities (Nominated Adviser)

Ben Jeynes

Katy Birkin

 

+44 (0) 20 7397 8900

Shore Capital (Corporate Broker)

Jerry Keen

+44 (0) 20 7408 4090

 

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.

 

bbl(s) means barrel(s) of oil; bcf means billion cubic standard feet of gas; boe means barrels of oil equivalent; boepd means barrels of oil equivalent per day; MMboe means million barrels of oil equivalent; MMbbl means million barrels of oil; MMscf means million standard cubic feet of gas; MMscf/d means million standard cubic feet of gas per day;  bopd means barrels of oil per day; and mmbtu means million British thermal units.

 

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

 


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