Echo Energy has an interest in the permit for the huge Tapi Aike block in Argentina
That is the company’s main focus after exploration elsewhere in the country proved uncommercial
Echo also has an involvement in early-stage acreage in Bolivia
How is it doing
“The acreage has three previous wells that show indications of gas from drilling and logs, and historical 2D seismic and partial 3D seismic.
“The block also benefits from the identification of three highly prospective independent gas exploration plays and one oil play.”
Echo has completed a seismic acquisition campaign and conducted extensive preparations for an upcoming drill programme.
Processed data from the 414 sq km eastern cube highlighted an amplitude feature similar to one identified during the interpretation of the 2D seismic.
An analysis is now focused on the geological understanding of this feature and where to drill.
More processing is currently underway for the larger, 790 sq km West Cube of Tapi Aike.
The plan is to start drilling Tapi Aike’s first well before the end of 2019.
An amendment to the permit was recently agreed that sees Echo now hold a 19% interest and pay 19% of future costs.
In late-October, Echo said it had decided on the location for the first of a four-well exploration drilling programme at Tapi Aike alongside licence operator CGC.
The well is in Chiripia Oeste, the eastern portion of the Tapi Aike 3D survey area, and will be re-named Campo La Mata x-1 (CLM x-1).
The primary target of CLM x-1 is a stratigraphic trap that lies in the Magallanes Formation (Magallanes 20" at an approximate depth of 2,000 metres.
A secondary horizon in the Anita Formation (D3) and a shallower secondary interval (Magallanes 60) will also be targeted by the well.
Spudding is expected in December with the well to be drilled in two vertical sections.
Santa Cruz Sur asset package
Echo has also agreed to acquire the Santa Cruz Sur asset package, which will give the company non-operated 70% interests in five blocks which host production adjacent to Tapi Aike.
The assets have two decades of production history, had 13.7mln barrels of 2P reserves at the end of 2018, and last year generated around US$31.9mln of revenue and US$8.2mln of earnings (EBITDA).
The company will pay US$7mln in cash plus US$1.5mln worth of shares, each priced at 2.91p, and potentially US$1.5mln of deferred consideration contingent on reserve increases before October 2020 – as part of the deal Echo pledges to fund the vendor’s costs in a new well planned in the fourth quarter.
Joint evaluation in Bolivia
Away from Argentina, Echo has an involvement in the neighbouring Latin American country of Bolivia, where it is currently partnered in a joint evaluation agreement with Pluspetrol for the Huayco block in the prolific Tarija basin.
Tarija is believed to be home to 85% of Bolivia’s gas reserves.
Echo is also waiting for a permit on the onshore Rio Salado Block.
The exploration company reported a US$7.87mln loss for the six months to June, including a US$2.79mln impairment of intangible assets and US$1.94mln of admin expenses.
Echo ended June with some US$4.12mln of cash and equivalents.
What the boss says: Martin Hull, chief executive
“As we continue to progress towards the spud of our first Tapi Aike well in Q4 2019, we continue to be excited by the potential identified and look forward to providing updates as appropriate.”
- Spudding of first well at Tapi Aike
- Movement on acreage in Bolivia
- Economic situation stabilises in Argentina