Echo Energy plc (LON:ECHO), the Latin American focused upstream oil and gas company, is pleased to provide a commercial update regarding the Company’s gas sales from the producing Santa Cruz Sur assets, onshore Argentina.
The Company has confirmed that it has secured a new contract at a premium to prevailing spot market rates with a key gas customer for four months until end April 2021 pursuant to which the Company will supply the customer with approximately 1.8 MMscf/d gross (1.3 MMscf/d net to Echo) of natural gas. In the absence of the new contract these volumes would have been sold to the spot market. The gas price under the contract is a flat $2.00 per mmbtu representing a significant 26% premium to the prevailing local spot price in November 2020.
Echo Energy continues to sell gas under a combination of secured contracts of up to a year in duration and spot sales and the result of the new contract is that approximately 60% of daily gas production from Santa Cruz Sur, under current market conditions, will be sold under secured contracts at significant premia to the current spot price during Q1 2021.
The assignment of Echo Energy’s 70% non-operated participation in the Santa Cruz Sur licences is subject to the authorisation of the Executive Branch of Santa Cruz’s Province, which is part of the overall process of title transfer that is proceeding as anticipated. Mmbtu means million British thermal units.