Echo Energy has entered into a “transformational” farm-in agreement for four onshore licences in Argentine.
The firm will pick up a 50% interest in each of the Fracción C, Fracción D, Laguna de los Capones and Tapi Aike licences.
The farm-in deal was struck with Compañía General de Combustibles S.A. (“CGC”), a privately-owned subsidiary of the Argentinian conglomerate Corporación América International.
The licences all sit in the prolific Austral Basin of Santa Cruz province in Argentina and cover a total of 11,153 square kilometres.
The transaction will provide the company with a blend of multi Tcf exploration potential, appraisal and production.
Echo said it provides a “material position” in the South American country.
Drilling is expected to start early next year.
Fiona MacAulay, chief executive officer, said: “Echo was launched in March this year to secure multi Tcf potential onshore gas assets across South and Central America counter cyclically.
“This transaction is a transformational acquisition in the region and will form the backbone of our gas business, blending exploration, appraisal and production.
“Echo is now positioned as a leading regional gas explorer with a unique platform for growth and a staged work programme. In line with its strategy, the Company will continue to review further opportunities in the region.”
The deal is contingent on a $2.5 million cash on signature of the farm-in.
A deferred cash payment of $2.5 million on completion of the initial term work programme.
By virtue of its size, the transaction constitutes a reverse takeover under Rule 14 of the AIM Rules for companies.