The Argentina focussed junior oil and gas firm this morning confirmed that its production has continued uninterrupted amid the coronavirus (COVID-19) pandemic and remains in-line with expectations.
In a statement on its operations, Echo said that net production averaged 2,250 barrels oil equivalent (boe) per day or 310,474 boe in aggregate in 2020 to date.
At the same time it noted recent changes by the Argentinian government for domestic oil price support, and reiterated that it is assessing the extent of the positive impact for the Santa Cruz Sur assets.
Also its operations will benefit from tax relief. VAT retention on domestic sales revenues has been reduced to 10.5%, from 21%.
Potential benefits could include the prospect of increasing oil production by bringing online previously shut-in wells., it added.
SP Angel analyst Sam Wahab, in a note, commented on Echo’s flurry of positive updates which follow a challenging period as the company works to restructure its finances.
“Supportive measures taken by the Argentinian Government alongside a robust production base will have a near term positive cash generative impact on the business,” Wahab said.
“The market’s focus will now turn to the approval of the restructuring of the company’s Luxembourg listed €20.0m 8.0% secured notes, which will be put to the noteholders at an adjourned noteholder meeting, to be held on 22 May 2020, which Echo will hope to be passed in a similar fashion to its other debt facilities.”
In this morning’s statement, Echo chief executive Martin Hull said: “Having moved quickly to implement measures to protect our staff, contractors and operations from the impact of COVID-19, I am pleased to report that production at Santa Cruz Sur has continued without interruption and is in-line with company expectations.”
“The extension of contracts with two key customers, at a premium to the April price, highlights the demand for our produced gas and provides a considerable boost to near term revenues.”