Echo Energy PLC (LON:ECHO) is to reduce costs at its Santa Cruz Sur assets in Argentina.
In a statement, the AIM-listed firm said that, in light of the current weakness in oil and gas prices, the Santa Cruz Sur assets are no longer cash flow positive.
Earlier this month, Echo Energy announced that it intended to put in place an additional unsecured standby credit facility, initially of £400,000 and up to £1mln.
The company's existing cash resources, even if supplemented by the proceeds of the additional facility, will not be sufficient to sustain operations at legacy Santa Cruz Sur cost levels beyond the short term.
As a result, Echo 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.
Gas prices are expected to continue to increase in the coming winter period. Such actions could include a delay in the ongoing activities relating to the testing of the Campo Limite (CLix-1001) well at Palermo Aike.