Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors
Why invest in ECHO?
Echo Energy Plc: THE INVESTMENT CASE

Echo Energy to follow a strong Latin American beat after Bolivian intro

Echo has ‘two fantastic opportunities’ in Huayco and Rio Salado in Bolivia
picture of oil facilities
INVESTMENT OVERVIEW: ECHO The Big Picture
Bolivia has two big neighbours that are crying out for gas
Few oil and gas companies have joined AIM surrounded by as much expectation as Echo Energy Plc (LON:ECHO).
 
Established through the refinance and relaunch of Independent Resources by the team that built the hugely successful Sound Energy PLC (LON:SOU), and chaired by its chief executive James Parsons, Echo has been dubbed Sound II.
 
New chief executive Fiona MacAulay, who joined Echo five weeks ago from South Atlantic explorer Rockhopper, acknowledges the Sound link but recent moves suggest its path is likely to be very different, certainly in respect of where their interest lies.
 
For a start, Hannam & Partners recent appointment as Echo’s new broker is a big sign of intent for a company currently valued at about £39mln (at 11p).
 
Hannam & Partners is the boutique set up by colourful financier Ian Hannam, dubbed ‘King of the Dealmakers’ for his role as a mover and shaker among the mining and oil titans in the last decade.
 
Exactly the right brand for Echo says MacAulay, who adds it would be “incredibly disappointing” if Echo is the same size in three years.
 
“We are small, agile, and don’t mind taking a risk, so this is absolutely the way for us to go.”
 
The broker also has a strong Latin/US contingent with Spanish speakers and there is no mistaking that Latin America is where her interest lies.

WATCH: Echo Energy 'in the right postcode' with Bolivian assets - CEO Fiona MacAulay

Bolivia 'a fantastic opportunity'

That already includes Bolivia, where Echo has ‘two fantastic opportunities’ in Huayco and Rio Salado.
 
These are 'multi-Tcf potential' gas assets with Shell on one side and Spanish giant Repsol on the other.
 
Repsol has already started drilling its acreage and Shell is slated to start in the next six months.
 
Huayco is at an earlier stage, but here Echo will reprocess seismic data with the option of taking an 80% operated stake if it decides to move to the drill phase.
 
Rio Salado surrounds Huayco, though different licences, and the seismic extends across both said MacAulay.
 
So for little more than the cost of the work at Huayco, Echo gets to assess the potential of an area of 250 sq km which includes the Rio Salado acreage.
 
It will incur costs of between US$1-1.5mln to carry out the seismic, for which it is funded, but a decision to drill, if that’s what the company decides after the technical work has been completed, will need more cash.
 
MacAulay is excited by the potential.
 
As well as contracts to supply gas to Argentina and Brazil that it needs to fulfil, Bolivia has a growing domestic need and the government is keen to get as much exploration underway as possible.
 
In addition, the infrastructure is in place with pipelines and processing facilities close by, while UK – Argentine relations have thawed to the point where Echo is being offered UK export finance to ship to Argentina.
 

Scope for M&A

MacAulay’s CV shows spells at Mobil, Amerada and the start of the international exploration business at BG so Bolivia is likely to be only the beginning of the journey.
 
Central America and even places as far north as the Caribbean are also on the radar.
 
After three months getting the right people in place, the next year will all be about the portfolio, making sure each of the bits are filled, there is adequate newsflow, milestones people can recognise and a balance of risk.
 
“That will involve some high risk/ high reward exploration and some lower risk assets, but there has to be the potential to add value, growth needs to be material. “
 
“A lot of small companies have underutilised Latin American assets”.
 
And the role of a consolidator is something that seemingly appeals.
 
“A few management teams should be nervous.”
View full ECHO profile View Profile

Echo Energy Plc Timeline

Related Articles

Offshore oil operations, North Sea
October 09 2017
Statoil sees between 25mln and 130mln barrels of oil in the new discovery which was unearthed in the side-track to the previously unsuccessful Verbier exploration well.
picture of oil facilities
August 14 2017
Echo has ‘two fantastic opportunities’ in Huayco and Rio Salado in Bolivia
Offshore-oil-platform.jpg
August 29 2017
Chariot Oil & Gas is working up several prospects on both sides of the Atlantic

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use