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Share Name Share Symbol Market Type Share ISIN Share Description
Echo Energy Plc LSE:ECHO London Ordinary Share GB00BF0YPG76 ORD 0.25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.005 -0.93% 0.53 0.52 0.54 0.544 0.53 0.535 1,074,516 09:11:41
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Oil & Gas Producers 11.1 -15.3 -2.0 - 7

Echo Energy PLC Interim Results

30/09/2021 7:00am

UK Regulatory (RNS & others)


Echo Energy (LSE:ECHO)
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TIDMECHO

RNS Number : 4557N

Echo Energy PLC

30 September 2021

30 September 2021

Echo Energy plc

("Echo" or "the Company")

Interim Results

Echo Energy, the Latin American focused upstream energy company, announces its unaudited interim results for the six months ended 30 June 2021.

H1 2021 Highlights:

-- Refocus of capex away from high-risk exploration into lower risk-production opportunities with swift pay back.

   --    Gross profit of US $0.4 million (H1 2020: loss of US$ 1.6 million). 
   --    Revenue increase of 5% to US $5.9 million in H1 2021 (H1 2020: US $5.6 million). 
   --    Reduction in cost of sales of 33% in H1 2021 compared to equivalent period in H1 2020 

-- Total net aggregate H1 2021 production of 304,639 boe (including 37,159 bbls of oil and condensate and 1,605 MMscf gas).

-- New gas sales contracts in place from May 2021 with premium pricing from innovative price auction.

-- Strong domestic gas prices supported enhanced cashflow generation with a 28% increase in gas price compared to same period a year ago with premium gas prices only coming into effect in last two months of the period.

-- Successful completion of the restructuring of both the Company's EUR 20.0m 8.0% secured notes and the Company's EUR 5.0m 8.0% secured convertible debt facility loan.

-- Echo received a successful VAT cash disbursement from the Argentine Government of US $0.5 million, a further signal that the country is progressing towards more regular activity.

Enquiries:

Echo Energy

   Martin Hull, Chief Executive Officer                       via Vigo Communications 
   Vigo Communications (PR Advisor)                              +44 (0) 20 7390 0230 

Patrick d'Ancona

Chris McMahon

   Cenkos Securities (Nominated Adviser)                       +44 (0) 20 7397 8900 

Ben Jeynes

Katy Birkin

   Shore Capital (Corporate Broker)                                  +44 (0) 20 7408 4090 

Jerry Keen

Certain of the information communicated within this announcement is deemed to constitute inside information for the purposes of Article 7 of EU Regulation 596/2014 (as amended), which forms part of domestic UK law pursuant to the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Chairman and Chief Executive Officer's Statement

The first six months of 2021 have seen Echo Energy plc ("Echo" or the "Company") emerge from the previous year's challenges both operationally and financially stronger. The Company moved swiftly to successfully restructure its debt, continue to conserve cashflow, begin to reinstate previously shut in production wells, and refocus its portfolio on progressing cashflow enhancing rapid return production opportunities. We have executed our strategy of moving away from high-risk exploration spend into lower risk-production opportunities with attractive pay back periods.

These important achievements and the improving macro environment combined with our commercial successes, including the renegotiation of gas sale agreements at substantial market premiums during the period, are reflected in an improved financial performance for the period.

As Echo continues its return to full liquids production at Santa Cruz Sur, and improved financial flexibility, we continue to identify and progress growth options across the existing portfolio, and the wider region, and work towards overcoming remaining challenges whilst maintaining our commitment to delivering value for our shareholders.

COVID-19 recovery and progress on production

At the beginning of the 2020 COVID-19 pandemic, extreme volatility in the energy markets resulted in the inability of the Company to sell crude oil and precipitated a decision to preserve cash through the temporary shut in of a significant number of Echo's oil producing wells. However, following continued improvements in market conditions, including a return to regular oil sales, Echo agreed, together with its Santa Cruz Sur partners, to upgrade and debottleneck the existing liquid pipelines that were previously shut in Q2 2020, as a path to returning to full oil production.

Expenditures of approximately US $0.3 million were injected by the Company to replace and upgrade parts of the Santa Cruz Sur infrastructure and reduce maintenance costs. By June 2021, Echo successfully delivered the project, demonstrating the effectiveness of the Company's in-country operational capability and enabling production previously shut in in April 2020 to be systematically brought back on line. A detailed update on liquid production increases was provided to the market in August 2021 with around a 50% increase in liquids production. This has enabled the Company to benefit from the upswing in global oil prices and the improved macro-outlook, symbolising a strong recovery from the challenges of the previous year. Whilst overall production, including gas remains below pre pandemic levels, the company continues to work towards improving production by undertaking the necessary operational activities and investments. With improved economic tailwinds and new infrastructure installed in the field, Echo now has the capacity to commission incremental enhancement projects within its portfolio. The reinvestment of available cashflow to drive further production increases remains an ongoing focus.

These increasing cashflows are expected to enable further production investments to be funded and demonstrate Echo's commitment to and confidence in its organic growth strategy within the Santa Cruz Sur asset base.

Successful execution of sales contracts at premium prices

In March 2021, Echo secured two new gas sales contracts at significant premiums to both prevailing spot market rates and 2020 contracted rates, with approximately 70% of gross daily gas production from Santa Cruz Sur allocated to industrial customers now committed under secured contracts until April 2022.

Following the Company's announcement in March 2021 relating to new gas sales contracts for 2021-2022, the Company agreed summer and winter pricing for its annual industrial clients, with the contracted winter premium providing substantially increased cashflow in the near term, helping to grow future operations through production enhancement work activities supported by infrastructure and compressor maintenance programmes.

In Q2, increasing liquids production represented delivery upon the Company's strategy to leverage the marked upswing in global commodity prices. With the additional liquids production expected to continue to contribute to a material cashflow increase, Echo continues to benefit from an improving domestic market situation. In May 2021, the Company sold gas to the spot market at an average price representing a 151% increase in prices compared to the March 2021 average spot price. All gas production, as of May 2021, was sold under the new gas sales agreements, reflecting significantly increased winter pricing. Any gas volumes not sold under the long-term contracts was sold to the spot market.

Delivery of successful debt restructuring preserving cash resources

In March 2021, Echo undertook a process of restructuring its debt to build a solid financial platform for reinvestment of its increasing cashflows into the Company's assets to deliver growth. The restructuring was successfully completed in April 2021, when holders of the Company's publicly listed bonds voted in favour of the restructuring of those securities. As a result, cash interest payments on the Company's listed bonds have been deferred until mid-May 2025. The completion of the bond restructuring also fulfilled the remaining condition of the Lombard Odier debt restructuring, which similarly pushed back maturity and preserved cash resources.

The company's balance sheet remains highly leveraged, and trade creditor levels are elevated reflecting the challenges presented by the pandemic, but the restructuring, along with the increased oil production following the ongoing infrastructure upgrades, provides a markedly improved and outlook for shareholders.

In May 2021, Echo received a partial VAT repayment from the Argentine Government as it resumed normal activity following months of COVID-19 related shut down. This process provided both material cash funds and further evidence of the normalisation of in-country activities following delays in 2020 caused by COVID-19.

Growth Opportunities

Campo Limite remains a potentially material well for the Company which could increase reserves and resources in the Palermo Aike concession and open up additional commercial options in the area. Well testing activities remain an operational and commercial focus and work remains ongoing to optimise commercial arrangements to enable activities to resume once pandemic constraints (which were in place throughout H1 2021) are lifted.

At the start of the year, the Company announced a five-year Cooperation Agreement with GTL International S.A, which has interests in both the hydrocarbon and renewables sectors. Both companies continue to collaborate and combine skill-sets to jointly promote their business development initiatives in the wider region, and identify and assess new business development opportunities across the full energy spectrum.

Financial

The six month period ended 30 June 2021 has seen Echo successfully manage value chains, enabling the Company to improve efficiencies at both corporate and asset level.

The Group posted a gross profit of US $0.4 million for the first time since the acquisition of the SCS asset for the six month period ended June 2021 compared to a loss of US $1.6 million for the comparable period in 2020, attributable to a decrease in cost of sales from US $7.3 million in H1 2020 to US $5.5 million in H1 2021, demonstrating enhanced operational efficiency and commodity prices.

Total revenue for the period was US $5.9 million (H1 2020: US $ 5.6 million), and comprised of US $2.1 million of Oil sales and US $ 3.8 million of Gas sales. Oil prices realised in H1 2021 were on average 21% higher during the period than in H1 2020. Volume weighted average realised gas prices increased by 28% compared to H1 2020.

Financial income of US $3.1 million recognised the interest gained on the Argentine VAT paid to the Group in May 2021 of US $0.24 million and net foreign exchange gains of US $2.9 million. Finance expense of US $ 3.2 million for H1 2021 is on a par with the prior comparable period (H1 2020: US $ 3.2 million).

Total comprehensive loss for the Group for the 6 month period ending 30 June 2021 was US $1.5 million (H1 2020: US $ 5.7 million)

The Group's balance sheet and overall financial positioning has materially strengthened during the period due to the successful debt re negotiation of its bonds and debt facility and the reduction in short term loan liabilities from US $2.3 million at 30 December 2020 to $0.14 million at 30 June 2021.

In January 2021, the Company's EUR 5.0m 8% secured convertible debt facility maturity date was extended to April 2025, with no furthercash interest payments due until maturity date. In addition, in April 2021, the Company's Luxembourg listed EUR 20.0m 8% secured bonds were successfully structured, extending the maturity of the notes to May 2025, and removing all cash interest payments prior to maturity date.

The Company's cash balance as at 30 June 2021 was US $ 0.9 million, a substantial increase from the balance as at 31 December 2020.

A 30% reduction of Trade and other payables from 30 December 2020 to 30 June 2021 is primarily due to the renegotiation of the Bond and debt facilities, but also reduction in joint venture payables.

Post Period End Highlights

The positive market changes seen in H1 2021 continue post period, and coupled with the restructuring completed in H1 2021, enable the Company to operate from a significantly more stable platform.

At the Santa Cruz Sur asset level, successful commissioning of the liquids pipeline enabled the Campo Molino oil field to be brought back online, contributing to an almost 50% increase in total liquids production in August 2021.

The maturation of the Company's investment in Santa Cruz Sur, and ongoing careful cost management have increased cashflows, enabling development in our producing asset, and release of capital which can be invested into the business to support business growth, maximising value for shareholders.

   James Parsons                                                                    Martin Hull 

Chairman Chie f Executive Officer

Consolidated Statement of Comprehensive Income

Period ended 30 June 2021

 
                                                        Unaudited         Unaudited        Year to 
                                                        1 January    1 January 2020    31 December 
                                                             2021                             2020 
                                                     30 June 2021      30 June 2020        Audited 
                                            Notes            US $              US $           US $ 
----------------------------------------  -------  --------------  ----------------  ------------- 
 Continuing operations 
 Revenue                                     3          5,891,413         5,656,740     11,126,520 
 Cost of sales                               4        (5,497,993)       (7,287,234)   (13,437,010) 
----------------------------------------  -------  --------------  ----------------  ------------- 
 Gross profit                                             393,420       (1,630,494)    (2,310,490) 
 Exploration expenses                                    (45,807)          (68,554)      (215,512) 
 Administrative expenses                              (1,492,010)       (1,480,136)    (3,240,934) 
 Impairment of intangible assets                                -                 -              - 
 Impairment of property, plant and                              -                 -              - 
  equipment 
 Operating loss                                       (1,537,817)       (3,179,184)    (5,766,936) 
 Financial income                            5          3,140,024             1,847          7,142 
 Financial expense                           6        (3,287,229)       (3,212,440)   (10,174,047) 
 Derivative financial income                 7             17,575           642,678        666,306 
----------------------------------------  -------  --------------  ----------------  ------------- 
 Loss before tax                                      (1,274,027)       (5,747,099)   (15,267,535) 
 Taxation                                    8                                    - 
----------------------------------------  -------  --------------  ----------------  ------------- 
 Loss from continuing operations                      (1,274,027)       (5,747,099)   (15,267,535) 
 Discontinued operations 
 Profit/(loss) after taxation for 
  the year from discontinued operations                                               (10,724,108) 
----------------------------------------  -------  --------------  ----------------  ------------- 
 Loss for the period                                  (1,274,027)       (5,747,099)   (25,991,643) 
 Other comprehensive income: 
 To be reclassified to profit or 
  loss in subsequent periods (net 
  of tax) 
 Exchange difference on translating 
  foreign operations                                    (177,930)                 -    (1,041,995) 
----------------------------------------  -------  --------------  ----------------  ------------- 
 Total comprehensive loss for the 
  period                                              (1,451,957)       (5,747,099)   (27,033,578) 
----------------------------------------  -------  --------------  ----------------  ------------- 
 Loss attributable to: Owners of 
  the parent                                          (1,451,957)       (5,747,099)   (27,033,598) 
----------------------------------------  -------  --------------  ----------------  ------------- 
 Total comprehensive loss attributable 
  to: Owners of the parent                            (1,451,957)        (5,747,099   (27,033,598) 
----------------------------------------  -------  --------------  ----------------  ------------- 
 Loss per share (cents)                      9 
 Basic                                                     (0.10)            (0.81)         (3.38) 
----------------------------------------  -------  --------------  ----------------  ------------- 
 Diluted                                                   (0.10)            (0.81)         (3.38) 
----------------------------------------  -------  --------------  ----------------  ------------- 
 Loss per share (cents) for continuing 
  operations 
 Basic                                                     (0.10)            (0.81)         (1.99) 
----------------------------------------  -------  --------------  ----------------  ------------- 
 Diluted                                                   (0.10)            (0.81)         (1.99) 
----------------------------------------  -------  --------------  ----------------  ------------- 
 
 

The notes included below form an integral part of these financial statements.

Consolidated Statement of Financial Position

Period ended 30 June 2021

 
                                                     Unaudited       Unaudited                    Year to 
                                                     1 January       1 January                31 December 
                                                          2021            2020                       2020 
                                                  30 June 2021    30 June 2020                    Audited 
                                         Notes            US $            US $                       US $ 
-------------------------------------  -------  --------------  --------------  ------------------------- 
 Non-current assets 
   Property, plant and equipment          10         2,516,805         986,283                  2,552,693 
   Other intangibles                      11         7,773,210      20,725,894                  8,511,622 
                                                    10,290,015      21,712,177                 11,064,315 
 Current Assets 
   Inventories                                         438,014         610,522                    541,230 
   Other receivables                                 5,846,670       7,688,813                  7,229,263 
   Cash and cash equivalents              12           945,488       1,164,408                    682,159 
-------------------------------------  -------  --------------  --------------  ------------------------- 
                                                     7,230,172       9,463,743                  8,452,652 
 Current Liabilities 
   Trade and other payables                       (10,075,368)     (8,253,260)               (13,249,146) 
   Derivatives and other liabilities                  (44,885)        (86,105)                   (62,477) 
                                                  (10,120,253)     (8,339,365)               (13,311,623) 
 Net current assets                                (2,890,081)       1,124,378                (4,858,970) 
-------------------------------------  -------  --------------  --------------  ------------------------- 
 Total assets less current 
  liabilities                                        7,399,934      22,836,555                  6,205,345 
 Non-current liabilities 
   Loans due in over one year             15      (28,162,903)    (24,229,005)               (27,276,015) 
   Provisions                                      (2,959,976)     (2,969,400)                (2,979,956) 
                                                  (31,122,879)    (27,198,405)               (30,255,971) 
 Total Liabilities                                (41,243,132)    (35,537,770)               (43,567,597) 
-------------------------------------  -------  --------------  --------------  ------------------------- 
 Net Assets                                       (23,722,945)     (4,361,850)               (24,050,627) 
-------------------------------------  -------  --------------  --------------  ------------------------- 
 
 Equity attributable to equity 
  holders of the parent 
   Share capital                          13         7,135,082       5,190,877                  6,288,019 
   Share premium                          14        64,748,942      64,817,662                 64,961,905 
   Warrant reserve                                  12,188,032      11,153,396                 11,373,966 
   Share option reserve                              1,570,827       1,358,132                  1,412,285 
   Foreign currency translation 
    reserve                                        (3,141,836)     (2,277,812)                (3,319,797) 
   Retained earnings                             (106,223,992)    (84,604,105)              (104,772,035) 
-------------------------------------  -------  --------------  --------------  ------------------------- 
 Total Equity                                     (23,722,945)     (4,361,850)               (24,050,627) 
-------------------------------------  -------  --------------  --------------  ------------------------- 
 
 

The notes included below form an integral part of these financial statements.

Consolidated Statement of Changes in Equity

Period ended 30 June 2021

 
                                                                                              Foreign 
                                                                                 Share       currency 
                           Retained        Share        Share      Warrant      option    translation 
                           earnings      capital      premium      reserve     reserve        reserve     Total equity 
                               US $         US $         US $         US $        US $           US $             US $ 
-------------------  --------------  -----------  -----------  -----------  ----------  -------------  --------------- 
 1 January 2021       (104,772,035)    6,288,019   64,961,905   11,373,966   1,417,285    (3,319,767)     (24,050,627) 
 Loss for the 
  period                (1,274,027)            -            -            -           -              -      (1,274,027) 
 Exchange Reserve         (177,930)            -            -            -           -        177,930                - 
-------------------  --------------  -----------  -----------  -----------  ----------  -------------  --------------- 
 Total 
  comprehensive 
  loss for the 
  period                (1,451,957)            -            -            -           -        177,930      (1,274,027) 
 Warrants issued                  -                 (814,066)      814,066           -              -                - 
 Warrants exercised               -      274,803       86,122            -           -              -          360,925 
 Share issue                      -      572,260      595,153            -           -              -        1,167,413 
 Transaction costs                                   (80,171)            -           -              -         (80,171) 
 Share options                    -            -            -            -           -              -                - 
 lapsed 
 Share-based 
  payments                        -            -            -            -     153,542              -          153,542 
-------------------  --------------  -----------  -----------  -----------  ----------  -------------  --------------- 
 30 June 2021         (106,223,992)    7,135,082   64,748,943   12,188,032   1,570,827    (3,141,837)       23,722,925 
-------------------  --------------  -----------  -----------  -----------  ----------  -------------  --------------- 
 1 January 2020        (78,857,006)    5,190,877   64,817,662   11,142,290   1,159,580    (2,277,812)        1,175,591 
 Loss for the 
  period                (5,747,099)            -            -            -           -              -      (5,747,099) 
 Exchange Reserve                 -            -            -            -           -              -                - 
 Total 
  comprehensive 
  loss for the 
  period               (84,604,105)    5,190,877   64,817,662   11,142,290   1,159,580    (2,277,812)      (4,571,508) 
-------------------  --------------  -----------  -----------  -----------  ----------  -------------  --------------- 
 Warrants issued                  -            -            -       11,106           -              -           11,106 
 Share options                    -            -            -            -           -              -                - 
 lapsed 
 Share-based 
  payments                        -            -            -            -     198,552              -          198,552 
-------------------  --------------  -----------  -----------  -----------  ----------  -------------  --------------- 
 30 June 2020          (84,604,105)    5,190,877   64,817,662   11,153,396   1,358,132    (2,277,812)      (4,361,850) 
-------------------  --------------  -----------  -----------  -----------  ----------  -------------  --------------- 
 
 1 January 2020        (78,857,006)    5,190,877   64,817,662   11,142,290   1,159,580    (2,277,812)        1,175,591 
 Loss for the year     (15,267,535)            -            -            -           -              -     (15,267,535) 
 Discontinued 
  operations            (3,441,230)            -            -            -           -              -     (10,724,108) 
 Exchange Reserve                 -            -            -            -           -    (1,041,995)      (1,041,955) 
 Total 
  comprehensive 
  loss for the year    (25,991,643)            -            -            -           -    (1,041,955)     (13,472,062) 
 New shares issued                -   1,0971,142      467,735            -           -              -        1,565,077 
 Warrants                         -            -    (231,676)      231,676           -              -                - 
 Share issue costs                -            -     (92,016)            -           -              -         (92,016) 
 Share options 
  lapsed                    396,935            -            -            -    (76,614)              -                - 
 Share-based 
  payments                        -            -            -            -     334,319              -          334,319 
-------------------  --------------  -----------  -----------  -----------  ----------  -------------  --------------- 
 31 December 2020     (104,772,035)    6,288,019   64,961,906   11,373,966   1,417,285    (3,319.767)     (24,050,627) 
-------------------  --------------  -----------  -----------  -----------  ----------  -------------  --------------- 
 

The notes included below form an integral part of these financial statements.

Consolidated Statement of Cash Flows

Period ended 30 June 2021

 
                                                          Unaudited                          Unaudited 
                                                          1 January                          1 January         Year to 
                                                               2021                               2020 
                                                       30 June 2021                            30 June     31 December 
                                                                                                  2020            2020 
                                                               US $                               US $            US $ 
-----------------------------------------  ------------------------  ---------------------------------  -------------- 
 Cash flows from operating activities 
 Loss from continuing operations                        (1,274,027)                        (5,747,099)    (15,267,535) 
 Loss from discontinued operations                                -                                  -    (10,724,108) 
-----------------------------------------  ------------------------  ---------------------------------  -------------- 
                                                        (1,274,027)                        (5,747,099)    (25,991,643) 
 Adjustments for: 
 Depreciation and depletion of 
  property, plant and equipment                              35,887                            102,442         182,211 
 Depreciation and depletion of 
  intangible assets                                         738,412                            982,102       1,874,810 
  (Gain)/Loss on disposal of property, 
   plant and equipment                                            -                                  -          10,822 
 (Gain)/Loss on disposal on Right                                 -                           (66,473)               - 
  of use 
   Impairment of intangible assets 
    and goodwill 
    Impairment of intangible assets                                                                  - 
    and goodwill                                                  -                                  -      10,383,461 
   Share-based payments                                     153,542                            209,658         334,319 
  Right to use liability                                          -                                  -        (64,180) 
   Financial income                                     (3,140,024)                            (1,845)         (7,142) 
   Financial expense                                      3,287,229                            728,821      10,174,047 
   Exchange difference                                  (1,656,272)                                  -     (2,265,180) 
   Derivative financial gain                               (17,575)                          (642,678)       (666,306) 
-----------------------------------------  ------------------------  ---------------------------------  -------------- 
                                                          (598,801)                          1,312,027      19,956,865 
 (Increase) in inventory                                    103,215                          (191,382)       (120,386) 
 Decrease/(Increase) in other receivables                 1,700,723                            988,467         311,275 
 (Decrease)/increase in trade and 
  other payables                                        (1,020,415)                          3,354,669       5,844,002 
-----------------------------------------  ------------------------  ---------------------------------  -------------- 
 Cash used in operations                                    783,523                          5,463,781     (6,034,891) 
 Net cash used in operating activities                  (1,089,305)                          (283,318)             112 
 Cash flows from investing activities 
 Purchase of intangible assets                                    -                          (248,092)       (470,637) 
 Purchase of property, plant and 
  equipment                                                       -                                  -     (1,644,516) 
-----------------------------------------  ------------------------  ---------------------------------  -------------- 
 Net cash used in investing activities                            -                          (248,092)     (2,115,153) 
 Cash flows from financing activities 
 
 Interest received                                          166,820                              1,845           7,142 
 Interest paid                                            (208,900)                            (1,746)               - 
 Bank Fees and other finance cost                          (63,136)                                  -       (185,520) 
 Repayment of right of use liability                              -                            (2,293)               - 
 Issue of share capital                                   1,167,413                                  -       1,565,077 
 Share issue costs                                         (80,171)                                  -        (92,016) 
 Proceeds from Warrant exercise                             360,925                                  -               - 
-----------------------------------------  ------------------------  ---------------------------------  -------------- 
 Net cash from financing activities                       1,342,951                            (2,194)       1,290,682 
-----------------------------------------  ------------------------  ---------------------------------  -------------- 
 Net (decrease)/increase in cash 
  and cash equivalents                                      253,646                          (533,604)       (824,360) 
 Cash and cash equivalents at the 
  beginning of the period                                   682,159                          1,698,012       1,698,012 
-----------------------------------------  ------------------------  ---------------------------------  -------------- 
 Foreign Excahnge gains(losses) 
  on cash and cash equivalents                                9,683                              -           (191,439) 
-----------------------------------------  ------------------------  ---------------------------------  -------------- 
 Cash and cash equivalents at the 
  end of the period                                         945,488               1,164,408                    682,159 
-----------------------------------------  ------------------------  ---------------------------------  -------------- 
 

The notes included below form an integral part of these financial statements.

Notes to the Financial Statements

Period ended 30 June 2021

1. Accounting Policies

General Information

These financial statements are for Echo Energy plc ("the Company") and subsidiary undertakings ("the Group"). The Company is registered, and domiciled, in England and Wales and incorporated under the Companies Act 2006.

Basis of Preparation

The condensed and consolidated interim financial statements for the period from 1 January 2021 to 30 June 2021 have been prepared in accordance with International Accounting Standards ("IAS") 34 Interim Financial Reporting, and on the going concern basis. They are in accordance with the accounting policies set out in the statutory accounts for the year ended 31 December 2020 and are expected to be applied for the year ended 31 December 2021.

The comparatives shown are for the period 1 January 2020 to 30 June 2021, and 31 December 2020 and do not constitute statutory accounts, as defined in section 435 of the Companies Act 2006, but are based on the statutory financial statements for the year ended 31 December 2020.

A copy of the Company's statutory accounts for the year ended 31 December 2020 has been delivered to the Registrar of Companies; the accounts are available to download from the Company website at www.echoenergyplc.com.

Going Concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman and Chief Executive Officer's Statement above. The financial position of the Group, its cash flows and liquidity position are set out in these Condensed Interim Financial Statements.

The directors have performed a robust assessment, including consideration of the principal risks faced by the Group and taking into account the ongoing impact of the global Covid-19 pandemic on the macroeconomic situation and any potential impact to operations.

The financial information has been prepared assuming the Group will continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations. Whilst rigorously pursuing cost control and value maximising strategies, the Group recognises that in order to pursue organic and inorganic growth opportunities and fund on-going operations it will require additional funding. This funding may be sourced through debt finance, joint venture equity or share issues.

The directors have formed a judgement based on Echo's proven success in raising capital and a review of the strategic options available to the Group, that the going concern basis should be adopted in preparing the Condensed Interim Consolidated Financial Statements.

Estimates

The preparation of the interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this condensed interim financial information, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to consolidated financial statements for the year ended 31 December 2020. The key sources of uncertainty in estimates that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities, within the next financial year, are the Group's going concern assessment.

Revenue Recognition

Revenue comprises the invoice value of goods and services supplied by the Group, net of value added taxes and trade discounts. Revenue is recognised in the case of oil and gas sales when goods are delivered and title has passed to the customer. This generally occurs when the product is physically transferred into a pipeline or vessel. Echo recognised revenue in accordance with IFRS 15. We have a contractual arrangement with our joint venture partner who markets gas and crude oil on our behalf. Gas is transferred via a metred pipeline into the regional gas transportation system, which is part of the national transportation system, control of the gas is transferred at the point at which the gas enters this network, this is the point at which gas revenue is recognised. Gas prices vary from month to month based on seasonal demand from customer segments and production in the market as a whole. Our partner agrees pricing with their portfolio of gas clients based on agreed pricing mechanisms in multiple contracts. Some pricing is regulated by government such as domestic supply. Echo receive a monthly average of gas prices attained. Oil shipments are priced in advance of a cargo and revenue is recognised at the point at which cargoes are loaded onto a shipping vessel at termina

2. Business Segments

The Group has adopted IFRS 8 Operating Segments. Per IFRS 8, operating segments are regularly reviewed and used by the board of directors being the chief operating decision maker for strategic decision-making and resources allocation, in order to allocate resources to the segment and assess its performance.

The Group's reportable operating segments are as follows:

                   a.            Parent Company 
                   b.            Eastern Austral Basin 
                   c.            Tapi Aike 
                   d.            Bolivia 

Performance is based on assessing progress made on projects and the management of resources used. Segment assets and liabilities are presented inclusive of inter-segment balances. Reportable segments are based around licence activity, although the reportable segments are reflected in legal entities, certain corporate costs collate data across legal entities and the segmental analysis reflects this.

Information regarding each of the operations of each reportable segment within continuing operations is included in the following table.

All revenue, which represents turnover, arises within Argentina and relates to external parties:

 
                             Parent Company   Santa Cruz    Tapi Aike     Bolivia     Total 
                                               Sur 
                             US $             US $          US $          US $        US $ 
 Period to 30 June 2021 
 
 Revenues                    -                5,891,413     -             -           5,891,413 
 Cost of sales               -                (5,497,993)   -             -           (5,497,993) 
 Exploration expense         (45,807)         -             -             -           (45,807) 
 Administration expense      (1,332,349)      (113,839)     (48,928)      (115,043)   (1,610,158) 
 Impairment of intangible 
  assets                     -                -             -             -           - 
 Impairment of property, 
  plant and equipment        -                -             -             -           - 
 Financial income            2,898,300        77,101        164,616                   3,140,024 
 Financial expense           (1,823,398)      (898,236)     (467,375)     (61)        (3,186,081) 
 Derivative Financial 
  Expense                    17,592           -             -             -           17,575 
 Income tax                  -                -             -             -           - 
 Loss before tax             (285,662)        (541,554)     (351,687)     (115,104)   (1,262,545) 
 
 Non-current assets          28,792,797       4,740,757     3,362,308     (453,174)   36,442,688 
 Assets                      28,940,599       9,214,984     5,947,869     (413,628)   43,689,824 
 Liabilities                 (28,816,764)     (7,943,328)   (4,421,895)   (81,125)    (41,263,112) 
 
 
 
                                   Parent            Santa 
                                  Company         Cruz Sur        Tapi     Bolivia     Consolidation     Total 
                                     US $             US $        Aike        US $              US $     US $ 
                                                                  US $ 
 Period to 30 June 2020 
 Revenues                    -              5,656,740        -           -           -                 5,656,740 
 Cost of sales               -              (7,656,740)      -           -           -                 (7,287,740) 
 Exploration expense           (68,554)     -                -           -           -                 (68,554) 
 Administration expense      (1,300,419)    (120,701)        56,538      (115,554)   -                 (1,480,136) 
 Impairment of intangible    -              -                -           -           -                 - 
  assets 
 Impairment of property,     -              -                -           -           -                 - 
  plant and equipment 
 Financial income              1,847        -                -           -           -                 1,847 
 Financial expense           (2,340,434)    (872,069)        (1,015)     1,078       -                 (3,212.440) 
 Depreciation                 642,678      -                -           -           -                 642.678 
 Income tax                  -              -                -           -           -                 - 
 Loss before tax             (3,064,882)    (2,632,263)      55,523      (114,476)   -                 (5,747,099) 
 
 Non-current assets          35,265,014     6,822,530        5,935,643   (271,171)   (26,032,839)      21,712,177 
 Assets                        45,181,992     (12,916,982)   (656,675)   (240,370)   (26,026,010)      31,175,919 
 Liabilities                 (23,073,545)     (12,406,577)   (2,314)     (49,335)    -                 (35,537,770) 
 

Consolidation adjustments in respect of assets relate to the impairment of intercompany assets .

Depreciation is included in administration expenses

The geographical split of non-current assets arises as follows:

 
                                    United 
                                   Kingdom     South America        Total 
                                      US $              US $         US $ 
-------------------------------  ---------  ----------------  ----------- 
 30 June 2021 
 Property, plant and equipment       2,457         2,514,348    2,516,805 
 Other intangible assets           326,869         7,446,341    7,773,210 
-------------------------------  ---------  ----------------  ----------- 
 30 June 2020 
 Property, plant and equipment      19,025           967,258      986,283 
 Other intangible assets                 -        20,725,894   20,725,894 
-------------------------------  ---------  ----------------  ----------- 
 

3. R evenue

 
                      Unaudited       Unaudited               Year to 
                      1 January       1 January           31 December 
                         2021 -          2020 -                  2020 
                   30 June 2021    30 June 2020    Audited -Continued 
                           US $            US $            operations 
                                                                 US $ 
 Oil revenue          2,024,421       2,090,922             2,784,248 
 Gas revenue          3,833,857       3,565,818             8,279,416 
  Other Income           33,135               -                62,856 
 Total Revenue        5,891,413       5,656,740            11,126,520 
---------------  --------------  --------------  -------------------- 
 

4. Cost of Sales

 
                                   Unaudited       Unaudited        Year to 
                                   1 January       1 January    31 December 
                                      2021 -          2020 -           2020 
                                30 June 2021    30 June 2020 
                                        US $            US $           US $ 
 Production costs                  3,794,486       5,723,033     10,021,578 
 Selling and distribution 
  costs                              863,065         764,918      1,567,963 
 Movement in stock of crude 
  oil                                 72,239       (191,382)       (89,410) 
 Depletion                           768,203         990,665      1,936,879 
 Total Costs                       5,497,993       7,287,234     13,437,010 
----------------------------  --------------  --------------  ------------- 
 

5. Finance Income

 
                                   Period to       Period to                          Year to 
                                30 June 2021    30 June 2020                      31 December 
                                        US $             US$                             2020 
                                                                                         US $ 
----------------------------  --------------  --------------  ------------------------------- 
 Interest income                     241,716           1,847                            7,142 
 Net foreign exchange gains        2,898,308               -                                - 
 
 Total                             3,140,024           1,847                            7,142 
----------------------------  --------------  --------------  ------------------------------- 
 
 

The Interest income principally relates to interest gained on Argentine VAT balances owed and paid to the Group in May 2021.

6. Financial Expense

 
                                           Period to       Period to                             Year to 
                                        30 June 2021    30 June 2020                         31 December 
                                                US $             US$                                2020 
                                                                                                    US $ 
------------------------------------  --------------  --------------  ---------------------------------- 
 Interest payable                          1,299,079       1,191,065                           1,991,535 
 Unwinding of discount on 
  long term loan                             404,081       1,131,249                           2,936,831 
 Amortisation of loan fees                   119,526         150,199                             614,913 
 Warrant Valuation expense                         -          11,106                                   - 
 Accretion of right of use 
  liabilities                                      -           2,293                               2,293 
 Unwinding of abandonment 
  provision                                   19,980               -                              39,956 
 Finance cost of holding bonds                     -               -                              11,971 
 Foreign Exchange Losses                   1,242,035         660,018                           4,409,732 
 Bank fees and overseas transaction 
  taxes                                      202,528          66,510                             166,816 
------------------------------------  --------------  --------------  ---------------------------------- 
 Total                                     3,287,229       3,212,440                          10,174,047 
------------------------------------  --------------  --------------  ---------------------------------- 
 

7. Derivative Financial Gain/Loss

 
                      Period     Period        Year to 
                          to         to    31 December 
                     30 June    30 June           2021 
                        2021       2020           US $ 
                        US $       US $ 
-----------------  ---------  ---------  ------------- 
 Fair value gain      17,575    642,678       666, 306 
-----------------  ---------  ---------  ------------- 
 Total                17,575    642,678       666, 306 
-----------------  ---------  ---------  ------------- 
 

Represents fair value gain on valuation of derivatives instruments at period end.

8. Taxation

The Group has tax losses available to be carried forward in certain subsidiaries and the parent company. Due to uncertainty around timing of the Group's projects, management have not considered it appropriate to anticipate an asset value for them. No tax charge has arisen during the six month period to 30 June 2021, or in the six months period to June 2020, or the year to 31 December 2020.

9. Loss Per Share

The calculation of basic and diluted loss per share at 30 June 2021 was based on the loss attributable to ordinary shareholders. The weighted average number of ordinary shares outstanding during the period ending 30 June 2021 and the effect of the potentially dilutive ordinary shares to be issued are shown below.

 
                                          Period to     Period to        Year to 
                                       30 June 2021       30 June    31 December 
                                                             2020           2020 
-----------------------------------  --------------  ------------  ------------- 
 Net loss for the year (US $)           (1,294,027)   (5,747,099)   (25,991,664) 
-----------------------------------  --------------  ------------  ------------- 
 Basic weighted average ordinary 
  shares in issue during the 
  year                                1,236,231,219   711,717,587    768,598,277 
-----------------------------------  --------------  ------------  ------------- 
 Diluted weighted average ordinary 
  shares in issue during the 
  year                                1,236,231,219   711,717,587    768,598,277 
-----------------------------------  --------------  ------------  ------------- 
 Loss per share (cents) 
 Basic                                       (0.10)        (0.81)         (3.38) 
-----------------------------------  --------------  ------------  ------------- 
 Diluted                                     (0.10)        (0.81)         (3.38) 
-----------------------------------  --------------  ------------  ------------- 
 

In accordance with IAS 33 and as the entity is loss making, including potentially dilutive share options in the calculation would be anti-dilutive. Deferred shares have been excluded from the calculation of loss per share due to their nature.

10. Property, Plant and Equipment

 
                            PPE - O&G                  CDL Licence                       Property 
                           Properties           Areas Discontinued       Fixtures    Right-of-Use 
                                 US $                         US $     & Fittings          Assets                 Total 
                                                                             US $            US $                  US $ 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 30 JUNE 2021 
 Cost 
 1 January 
  2021                      2,621,921                            -         97,254               -             2,719,175 
 Additions                                                       -              -               -                     - 
 Disposals                                                       -              -               -                     - 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 30 June 2021               2,621,921                            -         97,254               -             2,719,175 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 Depreciation 
 1 January 
  2020                         79,941                            -         86,542               -               166,483 
 Charge for 
  the 
  period                       29,790                            -          6,097               -                35,887 
 Disposals                          -                            -              -               -                     - 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 30 June 2021                 109,731                            -         92,639               -               202,370 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 
 Carrying 
 amount 
 30 June 2021               2,512,190                                       4,615               -             2,516,805 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 30 JUNE 2020 
 Cost 
 1 January 
  2020                        979,164                            -        131,122         309,804             1,420,090 
 Additions                          -                            -             35               -                    35 
 Disposals                          -                            -       (33,923)       (309,804)             (343,727) 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 30 June 2020                 979,164                            -         97,234               -             1,076,398 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 Depreciation 
 1 January 
  2019                          3,338                            -         91,366         224,176               318,880 
 Charge for 
  the 
  period                        8,568                            -         19,828          74,046               102,442 
 Disposals                          -                            -       (32,985)       (298,222)             (331,207) 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 30 June 2020                  11,906                            -         78,209               -                90,115 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 Carrying 
 amount 
 30 June 2020                 967,258                            -         19,025               -               986,283 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 
 
 
  31 DECEMBER 
  2020 
 Cost 
 1 January 
  2020                        979,164                            -        131,122         309,804           1,420,090 
 Additions                  1,644,460                            -             56               -            1,644,516 
 Disposals                    (1,703)                            -       (33,923)       (309,804)             (345,430) 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 31 December 
  2020                      2,621,921                            -         97,255               -             2,719,176 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 Depreciation 
 1 January 
  2020                          3,338                            -         91,366         224,176               318,880 
 Exchange                           -                            -              -               -                     - 
 differences 
 Charge for 
  the 
  year                         76,603                            -         19,980          85,628               182,211 
 Impairment                         -                            -              -               -                     - 
 charge 
 Disposals                          -                            -       (24,804)       (309,804)             (334,608) 
--------------  ---------------------  ---------------------------  -------------  --------------  -------------------- 
 31 December 
  2020                         79,941                            -         86,542               -            166,483 
--------------  ---------------------  ---------------------------  -------------  --------------  ------------------ 
 Carrying 
 amount 
 31 December 
  2020                      2,541,980                                      10,713                           2,552,693 
--------------  ---------------------  ---------------------------  -------------  --------------  ------------------ 
 31 December 
  2019                        975,826                            -         39,756          85,628           1,101,210 
--------------  ---------------------  ---------------------------  -------------  --------------  ------------------ 
 

11. Other Intangible Assets

Exploration and Evaluation

 
                                     Argentina                                              Ksar Hadada 
                                   Exploration            CDL Licence                       Exploration 
                                  & Evaluation     Areas Discontinued                           Acreage          Total 
                                          US $                   US $                              US $           US $ 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 30 June 2021 
 Cost 
 1 January 2021                     10,756,306                      -                                 -     10,756,306 
 Disposals                                   -                      -                                 - 
 Decommissioning assets                      -                      -                                 - 
 Additions                                   -                      -                                 - 
 30 June 2021                       10.756,306                      -                                 -     10,756,306 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 Impairment 
 1 January 2020                      2,244,684                      -                                 -      2,244,684 
 Depletion                             415,912                      -                                 -        415,912 
 Depreciation decommissioning 
  assets                               322,500                      -                                 -        322,500 
 Impairment charge for                       -                      -                                 -              - 
  the period 
 30 June 2021                        2,983,096                      -                                 -      2,983,096 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 Carrying amount 
 30 June 2021                        7,773,210                      -                                 -      7,773,210 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 31 December 2020                    8,511,622                                                               8,511,622 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 30 JUNE 2020 
 Cost 
 1 January 2020                     20,943,460                      -                                 -     20,943,460 
 Discontinued operations                29,401                      -                                 -         29,401 
 Additions                           1,105,009                      -                                 -      1,105,009 
 Transfer to PP&E 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 30 June 2020                       22,077,870                      -                                 -     22,077,870 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 Impairment 
 1 January 2020                        369,874                      -                                 -        369,874 
 Discontinued operations               982,102                                                                 982,102 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 Impairment charge for 
  the period 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 30 June 2020                        1,351,976                      -                                 -      1,351,976 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 Carrying amount 
 30 June 2020                       20,725,894                      -                                 -     20,725,894 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 31 DECEMBER 2020                   20,573,587                      -                                 -     20,573,587 
 Cost 
 1 January 2020                     10,802,524             10,140,936                                 -     20,943,460 
 Additions                             228,112                242,525                                 -       470,6537 
 Disposals                                   -           (10,383,461)                                 -   (10,383,341) 
 Decommissioning assets                      -                      -                                 -              - 
 Transfers                           (274,330)                      -                                 -      (274,330) 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 31 December 2020                   10,756,306                      -                                 -     10,756,306 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 Impairment 
 1 January 2020                         36,874                      -                                 -        369,874 
 Disposals                                   -           (10,383,461)                  -                   10,383,461) 
 Depletion                           1,874,810                      -                                 -      1,874,810 
 Impairment charge for 
  the year                                   -             10,383,461                                 -     10,383,461 
 31 December 2019                    2,244,686                      -                                 -      2,244,686 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 Carrying amount 
 31 December 2020                    8,511,622                      -                                 -      8,511,622 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 31 December 2019                   20,575,586                      -                                 -     20,573,586 
------------------------------  --------------  ---------------------  --------------------------------  ------------- 
 
 

On 22 December 2020 the Company announced that it had allowed the lapse of the option to re enter the Tapi aike asset. This resulted in Echo withdrawing its interest and liabilities under the Tapi Aike concessions prior to the drilling of the next exploration well in the Tapi Aike Western Cube.

12. Cash and Cash Equivalents

 
                                        Six months   Six months 
                                                to           to     31 December 
                                           30 June      30 June            2020 
                                              2021         2020 
                                              US $         US $            US $ 
-------------------------------------  -----------  -----------  -------------- 
 Cash held by joint venture partners       190,974      194,973          24,749 
 Cash and cash equivalents                 754,514      969,435         654,680 
-------------------------------------  -----------  -----------  -------------- 
 Total                                     945,488    1,164,408         682,159 
-------------------------------------  -----------  -----------  -------------- 
 

Echo has advanced cash to its joint venture partner. The equity share of the balance held is recognised

13. Share Capital

 
                                            Six months   Six months        Year to 
                                                    to           to    31 December 
                                               30 June      30 June           2020 
                                                  2021         2020 
                                                  US $         US $           US $ 
-----------------------------------------  -----------  -----------  ------------- 
 Issued, Called Up and Fully Paid 
 1,298,813 0.32c (June 2020: 711,717,587 
  0.32c) ordinary shares 
 1 January 2021                              6,288,019    5,190,877      5,190,877 
 Equity shares issued                          847,063            -        745,878 
-----------------------------------------  -----------  -----------  ------------- 
 30 June / 31 December                       7,135,082    5,190,877      6,288,019 
-----------------------------------------  -----------  -----------  ------------- 
 

The holders of 0.32c (0.25p) ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the Company.

During the six month period to 30 June 2021, 258,762,165 share were issued.

14. Share Premium Account

 
                                         Six months   Six months       Year to 
                                                 to           to 
                                       30 June 2021      30 June   31 December 
                                               US $         2020          2020 
                                                            US $          US $ 
------------------------------------  -------------  -----------  ------------ 
 1 January                               64,961,905   64,817,662    68,817,662 
 Premium arising on issue of equity 
  shares                                    595,153            -       467,934 
 Premium arising on exercise of 
  warrants                                   86,122 
 Warrants lapsed or exercised             (814,066)            -     (231,675) 
 Transaction costs                         (80,171)            -      (92,016) 
                                      -------------  -----------  ------------ 
 30 June                                 64,748,942   64,817,662    64,961,905 
------------------------------------  -------------  -----------  ------------ 
 

15. Loans

 
                                                                                30 June         30 June    31 December 
                                                                                   2021            2020           2020 
                                                                                   US $             US$           US $ 
----------------------  --------------  --------------------------  -------------------  --------------  ------------- 
 Five-year secured 
  bonds                                                                    (20,907,802)    (18,429,737)   (22,167,419) 
  Additional net 
   funding                                                                  (5,940,825)               -    (5,766,544) 
 Other loans                                                                (1,452,341)     (5,799,268)    (1,640,693) 
----------------------  --------------  --------------------------  -------------------  --------------  ------------- 
 Total                                                                     (28,300,968)    (24,229,005)   (29,574,656) 
----------------------  --------------  --------------------------  -------------------  --------------  ------------- 
                                                         Amortised            Repayment 
                            Balance as             finance charges         of principle        Exchange 
                                    at                   less cash                          adjustments        30 June 
                           31 December                    interest                  US$            US $           2021 
                                  2020                        paid                                                 US$ 
                                  US $                        US $ 
----------------------  --------------  --------------------------  -------------------  --------------  ------------- 
 EUR 20 million 
  five-year secured 
  bonds                     22,836,146                   1,246,109                          (2,583,675)     21,498,580 
 EUR5 million Lombard 
  Odier debt                 5,987,801                     311,220                            (178,515)      6,120,506 
  Other loans                1,640,692                     145,831            (208,900)       (125,282)      1,452,341 
 Loan fees                   (668,726)                      77,948                                    -      (590,778) 
 Incremental loan 
  fees                       (221,257)                      41,576                                    -      (179,681) 
----------------------  --------------  --------------------------  -------------------  --------------  ------------- 
 Total                      29,574,656                   1,822,684            (208,900)     (2,887,472)     28,300,968 
----------------------  --------------  --------------------------  -------------------  --------------  ------------- 
 
 

US $ 138,065 of the total loan balance is shown in current liabilities and US $28,162,903 is shown non-current liabilities.

Bond restructure

On 22 February 2021, Echo announced further to the Company's announcement of 1 December 2020, its proposals in respect of a restructuring of the Company's Bonds, it proposed to:

-- Extend the maturity of the Bonds by three years to 15 May 2025 (the "Maturity Date"); and

-- Remove all cash interest payments on the Notes prior to the Maturity Date.

On approval, all interest on the Bonds accruing from 31 December 2019 shall be paid in cash on the Maturity Date save that Noteholders will be provided with the ability, from 30 September 2021, to elect to receive Bond interest payments in respect of the immediately preceding quarter in new ordinary Shares in the Company ("Elections"), subject inter alia to the Company having the required share issuance authorities in place from time to time to satisfy elections and to Noteholders holding at least 50 per cent of the Bonds having made Elections in respect of the relevant quarter. Any new ordinary shares issued as a result of elections would be issued at an effective issue price equal to the volume weighted average price of an Echo ordinary share for the 10 Business Days before the relevant interest conversion date.

As part of the Proposals, the Company agreed that it will not, without the prior consent of Noteholders, drill an exploration well with a budgeted cost to the Company of in excess of EUR 5.0 million for so long as the Bonds are outstanding and that it will not, in the last 18 months prior to the Maturity Date, make an acquisition of an interest in an oil and gas property, lease or licence if the cash consideration for such acquisition exceeds EUR 10.0 million.

A payment of EUR 100,000, payable to Bondholders, was satisfied by the issue of new ordinary shares in the Company at an issue price equal to the average mid-market closing price per Echo ordinary share for the five days ending, and including, 18 February 2021.

Subsequently on 30 March 2021, a requisite majority of Bondholders approved the Debt restructuring proposals. Echo issued a total of 11,473,929 new ordinary shares in the Company (representing c.0.9% of the Company's current issued ordinary share capital) to Bondholders.

16. Subsequent Events

Operational Update

On 26 August 2021, following installation of the pipeline required to bring back online the liquids production which was shut in April 2020, the infrastructure was successfully commissioned for operation and shut-in wells are being brought online. This follows an upgrade of the electrical infrastructure, which was designed to support the first tranche of production from the Campo Molino and Chorillos oil fields to provide sufficient power to support sustained production from the associated ten wells.

To date, the Campo Molino oil field has been brought back online with four of the shut-in wells now back in operation and producing from the Springhill reservoir. This first tranche of restored production will increase the number of active producing oil wells at Santa Cruz Sur to 18.

As of 23 August 2021, the recently reactivated wells have contributed to an almost 50% increase in total liquids production at Santa Cruz Sur compared to the period immediately prior to this (281 bopd gross, 197 bopd net to Echo - during the period 1 -17 August 2021). This represents an increase of 137 bopd gross, 95 bopd net to Echo and work continues to bring the remainder of the first tranche of shut-in production back online. The production levels from the initial reactivated wells indicate that the shut-in period has not had a detrimental impact on reservoir behaviour in the Campo Molino oil field. Prior to shut-in, the combined gross production from the ten oil wells was approximately 138 bopd gross, 96 bopd net to Echo, approximately the same level now being achieved from the initial four wells, with the associated upgraded infrastructure.

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