19 February 2020
Echo Energy plc
("Echo" or "the Company")
CLM x-1 Non-Commercial Gas Discovery
Echo Energy, the Latin American focused upstream oil and gas company, announces a non-commercial gas discovery at the Campo La Mata Exploration well ("CLM x-1") in the Tapi Aike licence following completion of testing on the lower secondary target ("D3" or "Anita") and the primary target ("Magallenes 20" or "Lobe C").
The lower secondary Anita target was perforated over an eight metre interval between 2,395m and 2,403m and then mechanically stimulated. Following clean out operations, the secondary target flowed at surface at an estimated rate of up to 0.57 MMScf/d with an estimated average rate of 0.35 MMscf/d.
The Anita target also yielded condensate with an API gravity of 50 degrees, with a flow rate as measured at the well head at an estimated 7.5 to 18 bbls/d. The presence of condensate is in line with the mud-log, with 25% of higher-end (non-methane) components, and with the Anita target elsewhere in the basin.
The primary Lobe C target was perforated over a three metre interval between 2,214m and 2,217m and mechanically stimulated. Following clean out operations, the well flowed at surface at an estimated rate up to 0.28 MMScf/d with an estimated average rate of 0.25 MMscf/d. No condensate was retrieved from the interval, which is in line with the mud-log showing 93% methane.
To achieve the threshold of commerciality, it is estimated the well would require a stabilised production rate across the intervals of approximately 1.0 MMscf/d, which was not achieved from the Anita and Lobe C targets.
As a result, testing of the shallower Magallenes 60 interval, which was the upper secondary target of the CLM x-1 well, and the Magallenes 40 interval is now under consideration with the objective, in aggregate with the flow rates achieved from the intervals already tested, of seeking to exceed the commercial threshold. These additional sand intervals showed elevated gas shows during drilling and, whilst there can be no assurance that further testing and/or commerciality of the well will follow, further technical work will now be undertaken by the Tapi Aike partners to aid the consideration of whether testing of these additional intervals should be undertaken. In the interim, the CLM x-1 well will be shut in for evaluation and the Well Head Pressure will be measured during this time.
Whilst the lack of commerciality from the tested intervals is disappointing, the CLM x-1 well has proven the presence of a working petroleum system on the Chiripa Oeste 3D seismic in Tapi Aike, with the Class III amplitude vs offset ("AVO") characteristics being a successful predictor of the presence of gas. The data and information collected to date from the CLM x-1 well will be used to calibrate and further enhance the predictive capability of the 3D data acquired last year to identify other drilling locations that could be commercial.
Following the gas discovery as a result of this well result, it is anticipated that the Tapi Aike partnership will qualify for an extra year on the first Tapi Aike exploration period. An extension would take the current exploration licence phase to four years expiring on 7 September 2021 without additional commitments, enabling additional technical work to identify commercially viable drill locations. The operator of the Tapi Aike licence will request the additional year from the Santa Cruz Province and no issues are anticipated in obtaining the additional licence year.
The Tapi Aike partnership are evaluating the independent plays in the recently processed western seismic (Travesia de Arriba) with a view to drilling a well in this area later this year.
Further announcements in relation to the CLM x-1 well will be made, as appropriate, in due course.
Separately, testing operations at the recently drilled Campo Limite (CLix-1001) well at Santa Cruz Sur, are expected to commence, as scheduled, in the second half of February 2020 and the Company will provide an update on the testing operations in due course.
Martin Hull, CEO of Echo Energy commented:
"It is a disappointment that our initial exploration well at Tapi Aike has returned non-commercial flow rates from the tested intervals. Data from the CLM-x-1 well will now be used to calibrate and further inform our subsurface model and the JV partnership will use this enhanced dataset to identify future drilling locations on the licence It is anticipated that the second Tapi Aike Exploration well will spud in H2 2020.
At Santa Cruz Sur, we expect to commence testing shortly on the recently drilled Campo Limite (CLix-1001) well. We look forward to updating the market on the results of the CLix-1001 testing operations in due course."
For further information, please contact:
Echo Energy Martin Hull, Chief Executive Officer |
via Vigo Communications |
Vigo Communications (PR Advisor) Patrick d'Ancona Chris McMahon |
+44 (0) 20 7390 0230 |
Cenkos Securities (Nominated Adviser) Ben Jeynes Katy Birkin |
+44 (0) 20 7397 8900 |
Shore Capital (Corporate Broker) Jerry Keen |
+44 (0) 20 7408 4090 |
Note
The assignment of Echo's 19% participation in the Tapi Aike licences is subject to the authorisation of the Executive Branch of Santa Cruz´s Province, which is part of the overall process of title transfer that is proceeding as anticipated. The licence is operated by Compañía General de Combustibles S.A. ("CGC").
bbl means barrels; bbl/d means barrels per day; and MMscf/d means million standard cubic feet per day.
The information contained in this announcement has been reviewed by Echo Energy's Vice President, Exploration, Dr. Julian Bessa Msc, DPhil, a Fellow of the Geological Society and a Member of the Petroleum Exploration Society of Great Britain.
The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
