Echo Energy positive on outlook as it brings wells back online

The AIM-traded firm said that followed an upgrade of the electrical infrastructure, which was designed to support the first tranche of production from the Campo Molino and Chorillos oil fields, to provide sufficient power to support sustained production from the associated 10 wells.

Those upgrades were also part of the company's strategy to control critical infrastructure that was previously rented from contractors.

To date, the Campo Molino oil field has been brought back online, with four of the shut-in wells now back in operation and producing from the Springhill reservoir.

That first tranche of restored production would increase the number of active producing oil wells at Santa Cruz Sur to 18.

As of 23 August, the recently-reactivated wells had contributed to an almost 50% increase in total liquids production at Santa Cruz Sur compared to the period immediately prior.

That, the board said, represented an increase of 137 gross barrels of oil per day, with 95 barrels net to Echo, and work continuing to bring the rest of the first tranche of shut-in production back online.

The production levels from the initial reactivated wells indicated that the shut-in period did not have a detrimental impact on reservoir behaviour in the Campo Molino oil field.

Before shut-in, the combined gross production from the 10 oil wells was about 138 gross barrels per day, 96 barrels net to Echo, which was around the same level now being achieved from the initial four wells with the upgraded infrastructure.

Daily operations across the asset base in Santa Cruz Sur were continuing with the delivery of produced gas to industrial customers under contract with premium winter pricing being achieved.

Production over the period from 1 January to 23 August reached an aggregate of 381,243 barrels of oil equivalent net to Echo, which included 48,211 barrels of oil and condensate, and 1,998 million standard cubic feet of gas.

“During the third quarter we have continued to make significant operational progress and deliver against our objectives,” said chief executive officer Martin Hull.

“Successfully increasing our liquids production is an important milestone.

“There remain further production upsides as we continue through the programme of reopening previously shut-in wells.”

Hull explained that increased production, combined with the continuing marked upswing in global commodity prices, materially increased the firm’s cash flows, enabling reinvestment to further drive growth.

“The ongoing production increases have been achieved while maintaining our careful cost management in order to maximise value for shareholders.”

At 1255 BST, shares in Echo Energy were up 3.55% at 0.58p.