Operations Update, Debt Restructuring & Fundraise

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1 December 2020

Echo Energy plc

("Echo" or the "Company")

Operations Update, Debt Restructuring

and Fundraise

Echo Energy plc, the Latin American focused upstream oil and gas company, is pleased to provide an update on operations from the Company's 70% non-operated working interest in the Santa Cruz Sur assets, onshore Argentina and to announce a further restructuring of its corporate debt. The Company also announces a £0.7 million fundraise.

Operations Update

Daily production and operations in the field at Santa Cruz Sur continue with the delivery of produced gas to customers without interruption. Production levels remain, and are expected to remain, in line with the Company's expectations with average daily production (net to Echo's 70% interest) from Santa Cruz Sur for the period from 1 January to 17 November 2020 of 1,990 boepd (including 10.3 MMscf of gas) per day. Total cumulative production from Santa Cruz Sur over the same period net to Echo was 640,606 boe (including 3,329 MMscf of gas).

Since end July 2020, net daily oil production has increased by 109% with cumulative net oil production from this date of 17,859 bbls. As of 17 November 2020, net stock of liquids at the export terminal was 7,963 bbls and net stock in the field was 7,776 bbls. 

As of 17 November 2020 total cash held on deposit in the UK and Argentina was approximately US$ 655,000 (unaudited).

Debt Restructuring

Following constructive discussions with the holders of the Company's debt, the Company is delighted to announce that it has entered into an agreement (the "Agreement") with Lombard Odier Asset Management (Europe) Limited (the "Lender") to conditionally restructure the Company's EUR 5.0m 8.0% secured convertible debt facility (the "Debt Facility").

The terms of the Debt Facility (as previously amended) were announced by the Company on 21 October 2019 and 14 May 2020 respectively and the Debt Facility restructuring will, conditionally:

·    Extend the maturity by 3 years such that the Debt Facility will mature on the last business day of April 2025 (the "Maturity Date").

·    Result in no further cash interest payments prior to the Maturity Date, with interest to be rolled up and added to the then outstanding Debt Facility principal at maturity subject to the Lender having the option, from September 2021, to receive interest value in new Ordinary Shares in the Company issued at a 10% discount to the then prevailing share price at the time of the quarterly interest calculation and/or at the Maturity Date.

·    See the principal of the Debt Facility repayable in five quarterly instalments of EUR 600,000 commencing in March 2024 and the balance repayable on the Maturity Date.

·    Cancel 74.2 million warrants to subscribe for new Ordinary Shares granted to the Lender on entry of the Debt Facility, replaced by 74.2 million new warrants to subscribe for new Ordinary Shares (the "New Warrants") to effect a reduction in the exercise price of the New Warrants to 0.3 pence per new Ordinary Share. The New Warrants will vest on the date falling 3 months from Admission and expire on the Maturity Date.

The remaining terms of the Debt Facility will remain unchanged.

The Agreement is a very positive step for the Company, providing significant optionality and releasing capital which can instead be invested directly into the business to accelerate growth projects or support future acquisitions. The deferral of the Maturity Date delivers a debt position that is sustainable and positions the Company to take advantage of the anticipated improved market conditions.

With this Agreement in place, the Company is now proceeding to seek to restructure its Luxembourg listed EUR 20.0m 8.0% secured notes (the "Notes") thereby achieving a restructuring of its entire debt position and deferral of the maturity of the Notes until 2025. The Company is encouraged by ongoing discussions in this regard, which build upon the support of Note holders given to the Company earlier in the year and is positive that this outcome can be successfully achieved.

The restructuring of the Debt Facility pursuant to the Agreement is conditional upon, inter alia, admission of the  new ordinary shares issued pursuant to the fundraise described below being admitted to trading on AIM and on the holders of the Notes agreeing to restructure the Notes to defer maturity and interest payments on the Notes until 15 May 2025. The Company will now finalise its proposals in this regard and will be seeking to convene a meeting of the holders of the Notes shortly.

Fundraise

The Company also announces the successful completion of a fundraise to raise gross proceeds of £0.7 million through the issue of 233,333,333 new ordinary shares (the "Subscription Shares") at 0.3 pence per share (the "Subscription Price") to new and existing investors pursuant to a direct subscription with the Company (the "Subscription"), conditional on admission of the Subscription Shares to trading on AIM.

The Subscription Shares will, when issued, rank pari passu in all respects with the Company's existing ordinary shares of 0.25 pence each ("Ordinary Shares") and application will be made for the Subscription Shares to be admitted to trading on AIM ("Admission"). Admission is expected to take place on or around 8.00 a.m. on 4 December 2020.

The net proceeds of the Subscription of approximately £0.66 million will add to the Company's working capital resources and be applied towards a range of near term E&P growth projects within the existing portfolio designed to deliver production uplift which will serve as a platform for cash generation to underpin future growth, both strengthening the Company's balance sheet and also providing support for Echo to pursue value accretive transactions.

Following the issue of the Subscription Shares, the Company's issued share capital will consist of 1,040,050,920 Ordinary Shares. Each Ordinary Share has one voting right and no shares are held in treasury and this figure may be used by shareholders in the Company as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules. The Subscription is conditional on Admission but is not conditional on the Agreement becoming effective.

Martin Hull, CEO of Echo Energy, commented:

"2020 has presented many challenges, both for Echo Energy and the industry at large.  We have taken the opportunity to restructure our balance sheet to provide the platform and breathing space to access the very real opportunities our portfolio holds to deliver meaningful value to our investors. I am very pleased with the progress that we have made in the debt restructuring process and with the positive and constructive discussions we have had with our other major debt holders, who continue to show support.

We are focused on delivering production, cashflow and value growth for all stakeholders and this debt restructuring alongside the introduction of new capital marks a critical milestone on our journey."

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