Argentina-focused Echo scores gas sales deals
Argentina-focused Echo Energy has landed two gas sales contracts at significant premiums to both prevailing spot market rates and 2020 contracted prices, the London-listed junior reported on March 25.
The company secured the deals following an auction process for industrial clients. The contracts have 12-month durations, with gas sales starting in May this year. They are priced at a 126% premium to annual industrial contracts Echo obtained in May last year, and a 39% premium to current spot rates.
|
Advertisement: The National Gas Company of Trinidad and Tobago Limited (NGC) NGC’s HSSE strategy is reflective and supportive of the organisational vision to become a leader in the global energy business. |
Some 6.5mn ft3/day of gas production is committed under the contracts, including 4.6mn ft3/d net to Echo, at an average price of $2.64/mn Btu. This means 70% of gross daily gas production from the company's Santa Cruz Sur operations is now covered by contractual sales until April 2022. The company will be able to sell up to a further 1.9mn ft3/d net, which it said provided flexibility to capitalise on rising spot prices.
"We have previously commented on the improving market conditions for our business as commodity prices increase, and the company's ability to secure these new contracts with industrial customers via a competitive auction process reflects the increasingly supportive commercial environment," Echo CEO Martin Hull said. "It is encouraging to now go further and see the improved market conditions translate to tangible improvements in future revenue."
Thanks to the deal, Hull said the company could earn 50% more in contracted US dollar gas revenues during the 12-month period, compared with the previous year.
Echo has five licences in Argentina covering 2,693 km2 as well as an option for a 19% interest in an exploration block in the country. It has additional interests in neighbouring Bolivia.