Argentina upstream juniors watch: Petrolera Aconcagua Energía, Echo Energy

Argentine upstream firm Petrolera Aconcagua Energía said a newly acquired drilling unit mitigated its exposure to operational risk stemming from strong demand for such equipment from unconventional segment players. 

The 1,000HP rig will be initially deployed in Río Negro province, targeting conventional resources, a regulatory filing said. The second target area is the south of Mendoza province. 

“This acquisition will allow Aconcagua to execute the activity foreseen in its strategic plan in a coordinated manner, mitigating the risks of the lack of availability of tower equipment that the market is experiencing, product of the high demand from unconventional developments in Argentina,” the filing said.  

“This strategic decision is aligned with the action established by Aconcagua concerning the containment, maintenance and optimization of the development cost of the drilling projects in the investment portfolio of the company.”

Aconcagua recently announced an US$8mn bond sale and the extension of its extraction license at Mendoza province block Confluencia Sur for 10 years. Last year the company said it aimed to increase consolidated production to over 3,000boe/d.

Aconcagua’s production climbed 103% year-on-year in 3Q22 to 2,623boe/d, according to a company presentation. Of that, 15% was exported, up from 5% a year earlier and zero in 3Q20. Argentine E&P firms are ramping up production to boost exports, with appetites whetted by favorable prices on the international market and associated midstream investment.  

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Fellow Argentine player, British-registered Echo Energy, is looking at boosting working capital to accelerate production growth at block Santa Cruz Sur, in Santa Cruz province.  

The company is executing a growth plan at the acreage.

Total 2022 cumulative production at Santa Cruz Sur, net to Echo’s 70% interest, was an aggregate of 532,302boe, a regulatory filing said.

Fourth quarter production spiked at 149,049boe, up from 127,123boe in Q2.

Average liquids production in 2022 was 278b/d, up 25%.

“Given the success of the plan to date, the company is also looking at options to increase working capital availability which can be used for the benefit of accelerating production increases in early 2023 under the plan,” the filing said. “These production increases target the reactivation of a total of 30 or more wells in Santa Cruz Sur which, when combined with the infrastructure upgrades under the plan, could result in further increases to net production.”

Echo has a 70% stake in five concessions, operated by Norway’s Interoil, at Santa Cruz Sur. Net 1P reserves are 3.13 million barrels of oil equivalent, according to a 3Q22 investor presentation.