Shares of Latin America focused oil and gas firm Echo Energy (LON: ECHO) are climbing on Wednesday after it said market conditions continue to improve.
As a result, Echo has agreed with the Santa Cruz Partners to capital expenditure to upgrade and debottleneck the existing liquids pipelines in the Santa Cruz Sur assets to accelerate the return to full oil production and bring the remaining volumes previously shut, in Q2 2020, back online.
Upgrades to the pipeline will also provide additional capacity for future production enhancement projects that have been identified.
Capital expenditure net to Echo’s 70% working interest of around $275,000 will be injected to replace and upgrade parts of the infrastructure primarily in the Chorillos, Campo Molino, and Cerro Convento fields. Ten upgrade projects will be completed to enable the upgrade of around 23 km of pipeline.
Once the pipelines are fully operational, Echo anticipates gross daily liquids production will be restored to levels of between 480 bopd – 600 bopd.
Current production levels at Santa Cruz Sur remain in line with the company’s expectations, although, due to the improving macro outlook, the company noted that there has been an increased demand for Santa Cruz Sur oil, resulting in improved pricing and, as a result, more frequent oil sales totalling 17,600 bbls net to Echo in 2021.
“We are very pleased to be making continued progress across the portfolio as market conditions continue to improve,” said Martin Hull, Echo’s CEO.
“With stable production and several growth opportunities to pursue, we feel positive about the Company's prospects for 2021, especially having announced earlier this week, pending noteholder approval, progress in the restructuring of the Company's balance sheet,” added Hull.
Echo’s share price is currently trading 4% higher at 0.65p per share.
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