Echo Energy infrastructure upgrades clearly starting to benefit production (LON: ECHO)

Echo Energy

Echo Energy Plc (LON:ECHO), the Latin American focused energy company, has provided an operational update regarding its Santa Cruz Sur assets, onshore Argentina, for the quarter ended 31 December 2022.

We caught up with Daniel Slater, Analyst at Arden Partners to discuss the news.

Echo Energy has released a production update for Q4 2022, how did the numbers look?

The Q4 update showed an increase on Q3, particularly for liquids volumes, on the back of the production enhancement programme that has been ongoing since the summer. The infrastructure upgrades put through as part of this are now clearly starting to benefit production, and going forward we expect further progress as the company goes about the well reactivation element of the programme, targeting further increases in net production to 2mboe/d.

How do you see the outlook for the company?

As the company continues to implement its enhancement programme, we expect increases in production, but also disproportionate increases in cash flow, as higher revenues are put across a similar field fixed cost base. This should drive significant further cash availability for Echo, which the company can then redeploy into further work programmes, including its planned workovers programme. This in turn should drive further production and cash flow increases, again benefitting from the relatively constant fixed cost base. The busy work programme should also provide regular news flow for the stock.

Echo Energy plc (LON: ECHO) is a full cycle, exploration led, gas focused AIM-listed E&P with an exciting asset base in Latin America.

The company has an ambitious growth strategy to deliver shareholder value from both the existing portfolio and new opportunities.

The Company is led by a highly experienced team with strong regional connections and an indisputable track record in building mid cap AIM listed gas businesses with sustainable value growth for private investors.

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