Echo Energy PLC (LON:ECHO) has revealed a deal that sees the explorer potentially take up a new project, located onshore Bolivia.
It has signed a letter of intent (LOI) for a one year technical evaluation of the Rio Salado licence area.
The deal is with state-owned YPFB (Yacimientos Petrolíferos Fiscales Bolivianos) and it gives Echo the right to negotiate contract terms for the project at the end of the evaluation period.
Echo explained that the evaluation will include the interpretation and integration of 2D seismic, acquired in 2015 and 2016, which the company said will be ‘invaluable’ in the definition of deep multi-tcf structure mapped across the Rio Salado and Huayco blocks.
“We are delighted to have signed an LOI relating to a new Technical Evaluation Agreement which would secure a further period of time to evaluate the prospectivity of this licence area, incorporating additional 2D seismic data not previously available,” said Fiona MacAulay, Echo chief executive
“During the next 12 months the company will be in a position both to extend its understanding of the deeper structure and also to incorporate the results of the two important wells currently drilling in the area.”
Dollar over Pesos
Echo also told investors that in Argentina, it has agreed a deal with partner CGC (Compañía General de Combustibles S.A) that will see the company receive US dollars for all sales of gas instead of the Argentine Pesos.
The company detailed that gas sales remain denominated in US dollars but were previously settled in Pesos. All oil sales are denominated in US dollars - exports are settled in US dollars, while domestic sales are received in Pesos.
It also highlighted that, in August, the company sold approximately 71mln cubic feet of gas into the Argentinian market, while a further 24mln cubic feet was utilised for fuel and power.
The average price across Echo’s customer base remained above US$4.20 per million British thermal unit (mmbtu) through to July 2018.
It said 9,450 barrels of oil export cargo is waiting to be loaded at the Punta Loyola terminal, which follows a 6,400 barrel domestic oil sale which was completed during August. Receipts for the combined sales are expected to be around US$1mln.
MacAulay added: “We are very pleased that the strong market for oil exports continues in the region and that receipts in US$ are particularly positive for further reducing the exposure of the company to the current volatility of the Argentinian Peso.”