Echo's pivot to Argentina pays dividends
Echo Energy provided a production update for its Santa Cruz Sur oil and gas concession onshore Argentina on April 5, disclosing a 5.7% quarter/quarter improvement in gas flows.
In the quarter ending March 31, Santa Cruz Sur produced 134,167 barrels of oil equivalent net to Echo. That includes 662mn ft3 of gas, as well as 23,830 oil and condensate barrels.
Natural gas output from January to March climbed from 7mn ft3/d to 7.4mn ft3/d, while extraction of oil and condensate at the field averaged 265 barrels/day, up 10% quarter/quarter.
Echo said overall net production from Santa Cruz Sur climbed 6% over the quarter to 1,491 boe/d. It has a 70% stake in Santa Cruz Sur, which has been producing for around two decades.
Echo's CEO Martin Hull told NGW in December 2020 that his company was pivoting from "pure exploration" to become a more balanced E&P company. The business acquired Santa Cruz Sur and four other mature production assets in Argentina's Austral basin in late 2019, in a cash and shares deal worth up to $10mn.
Argentina's domestic gas price remained resilient throughout the pandemic, and Echo was able to finalise long-term contracts with two industrial clients last year, though these are set to lapse next month.
Echo has launched talks to conclude new gas supply contracts valid from May 2022. It said its bargaining position had significantly changed given the rise in global gas prices and signs of an economic recovery in Argentina.
The expiring gas offtake agreements carry an average price of $2.64/mn British thermal units, a 39% premium on local spot prices last year. Echo said it had also now closed on two purchase agreements for liquids from Santa Cruz Sur, which it says will help increase price competition for its products.