17th Mar 2020 18:22
(Alliance News) - Echo Energy PLC on Tuesday confirmed plans to cut costs amid a crash in the oil price caused by Covid-19.
Earlier March, Latin America-focused Echo confirmed it was looking at securing a new loan worth up to GBP1.0 million to provide extra working capital, if the oil price continued to fall.
The price has continued to decline "significantly", Echo said, though it does expect seasonal improvements in the price of gas.
Echo said operations at its Santa Cruz Sur assets are not currently cash flow positive at current oil and gas prices. Existing cash resources will not be sufficient to sustain operations on legacy assets at Santa Cruz Sur beyond the short-term.
"As a result, the company confirms it is exploring all options available to it to preserve existing cash resources at a corporate level and, together with the operator of Santa Cruz Sur, has identified and prioritised a number of field operating cost reductions to seek to ensure that operations are sustainable at current commodity prices, noting gas prices are expected to continue to increase in the coming winter period," said Echo.
"Such actions could include a delay in the ongoing activities relating to the testing of the Campo Limite (CLix-1001) well at Palermo Aike," it added.
Shares ended 54% lower on Tuesday in London at a price of 0.30 pence each.
By George Collard; [email protected]
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