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Echo Energy to walk away from EMS-1001 well location after disappointing test

“The disappointing results of the EMS 1001 stimulation have demonstrated the challenges of working in a new volcaniclastic play,” said Martin Hull, Echo managing director

oil and gas operations
Echo is now focused on 'more typical' reservoirs

Echo Energy PLC (LON:ECHO) told investors it has completed the stimulation programme for the EMS-1001 well at the Fracción C licence, onshore Argentina.

Initial results indicate that the EMS-1001 location is not commercial, and, no further testing is planned.

The well was mechanically stimulated through a 4m perforated interval in the Tobifera formation.

READ: Echo Energy continues to progress Argentina assets

After the completion of clean-up operations, the well produced only a mix of stimulation fluid and water, at an average flow rate of 465 barrels per day, and, no interpreted hydrocarbons were present.

Echo said the results suggest the interpreted hydrocarbons present in the section are not mobile.

“The disappointing results of the EMS 1001 stimulation have demonstrated the challenges of working in a new volcaniclastic play,” said Martin Hull, Echo managing director.

“As we continue with our very active 2019 work programme we are now focused on more typical reservoirs, without volcaniclastics, in the West of the basin (Tapi Aike) and the Springhill in our C,D & L licences in the East.

“We have a heavy work programme at Tapi Aike this year, with seismic acquisition currently ongoing, leading to an exciting drilling campaign.”

In a note to clients, analysts at joint ‘house’ broker Shore Capital said: “Whilst we agree that this is a disappointing result, reflecting the challenges of working in a complex volcaniclastic play, we highlight the fact that Echo will now continue with its very active 2019 work programme, focusing on more conventional reservoirs in the west of the basin at Tapi Aike, and in the east on the “C”, “D” and “L” licences.

“We see particularly significant potential at the high impact Tapi Aike project, where seismic data acquisition is ongoing prior to commencement of an exciting drilling campaign.

“We therefore continue to highlight Echo’s active work programme across its portfolio in Argentina, where we see considerable unrisked potential.”

In afternoon trading, shares in Echo Energy were down 34.50p at 5.60p.

 -- Adds analyst comment, share price --

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Price: 2.725 GBX

AIM:ECHO
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Market Cap: £16.44 m
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