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Echo Energy clarifies position regarding Argentinian Peso

Echo told investors that it holds its cash in pounds, US dollars and Euros.
oil and gas operations
Earlier this week Echo kicked of exploration drilling

Echo Energy PLC (LON:ECHO) has clarified its position regarding the economic situation in Argentina which, at a cash level, could be argued to be a positive for the explorer.

The company, in a statement, noted the increase in Argentina’s interest rate to 40% - which triggered a currency free-fall - and confirmed that it does not hold its cash in Argentinian Pesos.

READ: Echo Energy sizes up massive potential for Tapi Aike licence

It added that it has no borrowings linked to Argentinian Pesos either.

Instead, the group’s policy is to hold all cash in either GBP, USD and Euros. Capital costs tied to the group’s ongoing Argentinian work programme are priced in USD and only converted to Pesos at the point of payment.

Similarly, the company said that its sales in the country are denominated in USD and are only converted to Pesos on receipt of funds.

“These receipts are used to pay local operating costs that are due in Pesos, and, as a result, the Company's exposure to the recent weakening of the Peso has been positive,” Echo said in the statement.

Exploration and work-over programmes

Echo earlier this week kicked off an exploration drilling programme at the Fracción C asset, where it has four wells planned.

The first well, referred to as ELM-1004, is targeting the crest of a structure that’s estimated to host some 38bn cubic feet of potential gas resources. It is located around four kilometres from the Estancia La Maggie gas collection facilities, and thus has potential to be commercialised relatively quickly.

It follows well workover success at the Fracción D asset, where an extended flow period was recently completed in the CSo-85 well. Further announcements regarding both wells are anticipated as the respective programmes advance.

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