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‘Crypto and Black Gold – Higher the Risk, Higher the Reward’

By Arjun Thakkar and Alan Green

Bitcoin worth more than $200bn was wiped off the crypto market on 12th of May. The crash in the BTC price accompanied a generally volatile and uncertain stock market that has seen the Dow Jones and FTSE100 down by 12.7% and 3.7% respectively from the start of the year. The core principle of the markets has always been higher the risk, higher the reward, but the current downward spiral seems to be driven by a perfect storm of events. Is this therefore the end of a bullish run for assets and the risk is too high now for any reward, or are we just seeing a major correction?

The key uncertainty spooking the markets are the high inflation rates. These are being driven by a number of factors, including supply chain problems from China, the Russia-Ukraine war and consequential 25% hike in the price of wheat. Interest rate hikes from the Fed and BoE are pushing borrowing costs higher and driving a sell-off in markets and crypto.

In these uncertain markets investors look for safe investments and the increase in interest rates in 2022 by 0.5% and 0.75% by the BoE and Fed respectively have made cash savings more attractive, leading to a massive sell off in stocks. Added to this, the hitherto stellar performances from crypto assets such as BTC and ETH have prompted well-heeled crypto investors to take their money off the table,  further driving the down turn in crypto market valuations.

Supply chain issues continue to act as a drag. China accounts for around 13% of the global trade, and China’s zero tolerance approach towards Covid has led to a lockdown in the country, which has partly resulted in huge levels of shipping congestion near the Chinese ports. Companies such as Tesla have lost about a month of work because of the Shanghai lockdown, and some other companies claim that an “abnormally high” level of inventory was in transit, unavailable or held at ports, sending the stock market into a frenzy. (Bloomberg, 2022)

 

Image: World Bank

Along with the supply chain crisis, the Russia-Ukraine war has played a significant part in the fortunes of both stock and crypto markets. Russia previously supplied the European continent with 40% of its natural gas and 25% of its oil. The subsequent sanctions and ban on Russian imports sent the price of oil soaring to $109/barrel, driving inflation, and while some of the oil majors and smaller listed oilco’s are now trading at multi year highs, the uncertainty has weighed heavily on the markets.

The impact of higher oil prices has also impacted positively on companies at the junior end of the market. Echo Energy (AIM: ECHO) which has a license portfolio of 12 producing oil and gas fields with infrastructure in Santa Cruz Sur region of Argentina, found itself in the midst of this global demand for oil. Since the start of the Russia-Ukraine war (24th February 2022), Echo Energy shares have risen by 13.1% and at one point (22nd April) had returned its investors a 47% share price increase since the start of the war.

 

Source: Echo Energy

Whatever phrase you might use to describe it – end of bull run or correction – bitcoin has fallen to its lowest levels in years – $29,000. A number of factors can be attributed, but one key driver has been the collapse of so called stable coin terraUSD (UST), which as a supposedly stable asset, fell from a high of $118 (£96) to $0.4, rocking the crypto currency markets and having a knock-on effect on other stablecoins. The companies behind stablecoins try to ensure they remain in parity with assets such as the US dollar, so one token will equal $1. The collapse of a stablecoin has fundamentally weakened crypto assets for the present, but despite this, after touching $29,000, BTC rocketed 7.6% to $31,200 in one day, demonstrating that there is a chance for brave traders to turn a profit during these volatile times.

This volatility also boosted cryptocurrency transaction volumes on platforms like Binance and Hotcoin Global, which on 11th May 2022 saw 24hr trading volumes of $27.44bn and $10.27bn respectively, generating spectacular platform commission in the process.

There has also been a consequential read over for listed blockchain and crypto companies such as dual listed Coinsilium (AQX: COIN, OTCQB: CINGF), which is a blockchain, open finance, and crypto finance venture builder. Coinsilium shares fell to $0.025 on May 12th, but the next day shares rocketed to $0.039, providing a 24hr return of 56%. The drop in price for # Coinsilium can be attributed to systematic (market) risk and macro-economic factors such as inflation and the collapse in stable coin terraUSD.

 

 

While cryptocurrency continues to fluctuate, of course share price performance can be driven by stock specific issues in addition to macro factors. In the case of Coinsilium, in addition to a substantial amount of cash reserves held in crypto currency, the company is growing through its strong fundamentals and most recently a positive response to its recent seed investment in Yellow Network, the first broker clearing network for cryptocurrency exchanges, brokers and trading institutions. Yellow Network assists and develops mesh networks of crypto brokers and traders to execute ultra-high speed trading via decentralised exchanges. With such high volatility and huge transaction volumes in the crypto markets, Coinsilium’s Yellow Network investment could see it benefit from substantial, volume based commission revenues in the future.

What both Echo Energy and Coinsilium fundamentals demonstrate here, is that despite the market turmoil and highly uncertain outlook, they both depict the core principle of the markets – ‘higher the risk, higher the reward.

Alan Green discusses #RBG Revolution Bars, #POW Power Metal Resources & #ECHO Echo Energy on the Vox Market Podcast

Alan Green discusses #RBG Revolution Bars, #POW Power Metal Resources & #ECHO Echo Energy on the Vox Market Podcast

Listen to the podcast here

#ECHO Echo Energy – Total Voting Rights

echo

Echo Energy, the Latin American focused full cycle energy company announces, in accordance with the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules, the following information as at 31 January 2022:

 

 

Class of share

 

Total number of shares

 

Number of voting rights per share

 

Total number of voting rights per class of share

 

 

Ordinary shares of 0.25p each (“Ordinary Shares”)

 

 

1,452,491,345

 

1

 

1,452,491,345

 

 

No Ordinary Shares are held in treasury.

 

The above figure for total number of Ordinary Shares may be used by shareholders as the denominator for the calculations by which they determine if they are required to notify their interest in, or change to their interest in, the Company under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.

UK Investor Magazine Podcast – Pets at Home #PETS , Blencowe Resources #BRES , Echo Energy #ECHO and Tertiary Minerals #TYM with Alan Green

 

Alan Green joins the UK Investor Magazine Podcast for a discussion around global markets and UK equities.

Global equity markets have had a rollercoaster of a week with fears over a Russian invasion of Ukraine and the impact of interest rates caused significant levels of volatility in markets.

There is a clear division opening up in global markets with the FTSE 100 rising 1.5% year to date whilst the S&P 500 has shed 8.4% and the NASDAQ 13.5%.

We look at what the composition of the FTSE 100 means, and if it could outperform US indices after years of underperformance in 2022.

FTSE 250 Pets at Home rose 4.5% after the group released 8.7% increase in like-for-like sales and said profit was going to exceed prior expectations.

We also look at the latest developments at Blencowe Resources, Echo Energy and Tertiary Minerals.

Blencowe Resources operate the Orom-Cross Graphite Project in Uganda and have recently updated the market with a works programme.

Pets at Home, FTSE 100 outperformance, and Graphite mining with Alan Green

Alan Green covers Panther Metals #PALM and Echo Energy #ECHO on this week’s Stockbox Research Talks

Alan Green covers Panther Metals #PALM and Echo Energy #ECHO on this week’s Stockbox Research Talks

Echo Energy #ECHO CEO interview – Alan Green talks to Martin Hull

Echo Energy #ECHO CEO interview – Alan Green talks to Martin Hull, an oil and gas exploration, development and production company with onshore assets in Argentina. Martin provides an overview of the company’s activities, before looking at the recent move into renewable with the Chilean Solar project. We then look at the transformation that took place in 2021, with the ramp up in oil and gas production at the Company’s Santa Cruz Sur asset portfolio, and examine the upcoming well intervention programme that will ramp up production volumes in 2022. We look at the macro picture for commodity and energy prices, before Martin talks about ECHO’s financial position following the recent fund raise. Martin finishes by summarising upcoming milestone events for the first half of 2022.

#ECHO Echo Energy – Directorate Changes

echo

Echo Energy, the Latin American focused full cycle energy company,   is pleased to announce the appointment of Christian Yates as an independent non-executive director, with effect from 17 January 2022.

Christian is Chairman of Gresham House Renewable Energy VCT 2 plc, one of two listed investment companies he co-founded in 2010. He has been investing in, advising on and promoting investments in renewable energy since 2009.

Following eight years in the British Army, Christian began his career in fund management in 1988. He has worked for several investment houses holding senior positions at Bear Stearns Asset Management where he was CEO International, Julius Baer Investments as CEO London, Chase Asset Management as MD EMEA and Lazard Asset Management.

Since 2012, Christian has combined being an entrepreneur and consultant with being a non-executive director, with significant experience across  sectors including renewable energy (including wind, waste to energy and BESS), real estate, hospitality, fund management and wealth management where until October 2020 he was Chairman of the Bowmore Wealth Group.

The Company also announces that Gavin Graham, a non-executive director of the Company, will be stepping down as a director of the Company concurrently with Christian’s appointment in order to maintain a fit for purpose board composition and size.

James Parsons, Non-executive Chairman, commented: 

“I am delighted to welcome Christian to the Board.  His deep background across the renewable energy space is a critical enabler for our energy transition in Latin America and will add a vital and relevant dimension to our thinking. We will benefit hugely from Christian’s wealth of experience throughout the energy arena and I look forward to working with him.

I am also extremely grateful to Gavin for his support at Echo over the years, his contributions to our board discussions  and I wish him all the best for his future endeavours.”

The directorships and partnerships currently held by Christian Yates and over the five years preceding the date of appointment are as follows:

Mr Christian James Kurt Yates , aged 59

 

Current directorships/partnerships Previous directorships/partnerships
Aura Sustainable Capital Investments Ltd

Away Birmingham Limited

Away Cheltenham Limited

Away Holdings Limited

Away Storage Limited

Away Storage Liverpool Limited

CJK & RA Yates LLP

Gresham House Renewable Energy VCT 2 plc

New Radiation (2008) LLP

Remount T/A Future for Heroes Ltd

Weirs Drove Development Limited

 

127 Piccadilly Plc

Aura Renewables Infrastructure Trust plc

Bowmore Asset Management Limited

Bowmore Financial Planning Limited

Bowmore Wealth Group Limited

Canvenue Limited

Cherif Barnes Developments Limited

Cherif Hampton Row Holdco Ltd

Cherif Investment Properties Ltd

Hampton Row (Barnes) Management Limited

Managed Storage Services (1) Ltd

W4B (UK) Limited

 

Mr Yates was appointed as a director of W4B Bristol Limited on 27 April 2009. Liquidators were appointed to W4B Bristol Limited on 17 March 2015 and that company was dissolved on 12 April 2016. Unsecured creditors were paid a first and final dividend totalling £30,350, equating to 19.96 pence per GBP on unsecured claims of £152,048.

Christian Yates does not hold any ordinary shares in the Company and there are no further disclosures to be made pursuant to Schedule 2 paragraph (g) of the AIM Rules.

For further information please contact:

 

Echo Energy plc

Martin Hull, Chief Executive Officer

 

Via Vigo Communications Ltd

 

 

 

Cenkos Securities plc (Nominated Adviser)

Ben Jeynes

Katy Birkin

 

 

Tel: 44 (0)20 7397 8900
Vigo Communications Ltd (PR Advisor)

Patrick d’Ancona

Chris McMahon

 

 

Tel: 44 (0)20 7390 0230
Shore Capital (Corporate Broker)

Anita Ghanekar

#ECHO Echo Energy – Production Update, Acquisition and Issue of Equity

echo

Echo Energy, the Latin American focused upstream energy company, is pleased to provide a   Q4 2021 production update regarding its Santa Cruz Sur assets, onshore Argentina. 

In addition, further to Echo’s long stated intention to leverage its commercial and technical capabilities across the wider energy spectrum, including solar, the Company is pleased to announce its entry into the Chilean solar energy market with the entry of an option agreement to purchase a 70% interest in a 3MW solar project in Chile (the “Option”) and the forming of a partnership with Chilean company, Land & Sea SpA (“LAS”), a highly experienced developer of solar projects in Chile, to fund, construct and operate the project.  

Q4 2021 Argentinian Production Update

During Q4 2021 daily operations in the field at Santa Cruz Sur continued with the delivery of produced gas and liquids to key industrial customers and total 2021 cumulative production from Santa Cruz Sur net to Echo’s 70% interest reached an aggregate of 567,370 boe (including 2,920 MMscf of gas).

During Q4 2021, net liquids production averaged 240 bopd whilst net gas production averaged 7.0 MMscf/d. These production levels have been achieved despite a province-wide strike that temporarily reduced production levels over a six-day period in mid-December. Production for the first eight days of 2022 has been strong, with liquids production net to Echo averaging 262 bopd and net gas production averaging 8.3 MMscf/d.

As previously announced, the successful implementation of the Company’s strategy with the commercial focus on high-quality blends at Santa Cruz Sur, has continued to lead to an increased frequency of liquids sales throughout Q4 2021. Total liquids sales net to Echo over Q4 2021 reached 25,881 bbls which is an increase of 71% over the previous quarter (Q3 2021: 15,050 bbls). 

Entry into Chilean Solar Market – Highlights

· Option in relation to the 3 MW Vincente Méndez solar project (the “Project”) and Joint Venture with LAS, a highly experienced developer of solar projects in Chile

· On exercise of the Option, Echo will loan 100% of capex to construct the Project in return for a 70% indirect equity interest in the Zorro Solar SpA holding the rights to the Project (the “Project SPV”) with the remaining 30% interest in the Project SPA held by LAS

· Entry into the Project requires no upfront acquisition payment and instead provides Echo with access to attractive ‘ground floor terms’

· LAS will manage the Project locally, without a management fee, whilst Echo will maintain its 70% controlling interest in the Project SPV

· Following construction and on the sale of the Project, the construction loan provided will be repaid to Echo at 4% interest, with remaining sale proceeds split 70% Echo and 30% LAS, after reimbursement of US$100,000 of historical LAS costs

· If the option is exercised by Echo, gross construction capex for the Project is currently estimated at US$2.6 million and Echo will control the timing of expenditure

Under the Option agreement, the Company has the right to acquire a 70% interest in the Project, subject to certain conditions including the provision by the Company of the funding described below, with the intention to form a Joint Venture to construct and operate the Project. The Option is exercisable by the Company, in its sole discretion, at any time during the period up to 4 weeks from the date on which sufficient documentation has been provided to the Company required to enable a Final Investment Decision (“FID”). Echo’s current intention is to exercise the Option providing final documentation, including supplier and service contracts, is provided confirming the attractiveness of potential Project returns and the availability of non-recourse or project finance funds sufficient to meet Echo’s potential capex obligations. Further announcements will be made by the Company in this regard as appropriate.

By diversifying its asset portfolio via the entry of the Option, Echo will be well placed to capitalise on a new business segment that has the potential to provide low risk, stable cash flows, and attractive risk weighted returns that can support future investments in the base business in Santa Cruz Sur, whilst capitalising on complementary skills sets and geographic focus. Furthermore, Chile is a country with world class renewable energy resources; an established renewable energy industry and fiscal regime; excellent infrastructure; and ambitious energy transition targets. 

Following careful analysis of multiple renewable energy projects, the Echo Board believe the Option to acquire an interest in the Project provides an important and exciting opportunity in the continued growth of the Company.

The Vincente Méndez Solar Project

The Vincente Méndez solar project is located 4 km from Chillan, a city of around two hundred thousand people, in central Chile, less than 0.2 km from the grid connection point and near to trunkline electricity and transport infrastructure to the capital Santiago. In this area, where solar radiation levels are similar to Mediterranean Europe, 3 MW capacity is expected to produce around 5,800 MWh/year, which is approximately double the average output of a UK solar plant of the same size.

Importantly, the Project will be part of the Chilean PMGD Scheme (Pequeños Medios de Generación Distribuida) which provides access to a favourable and stabilised long-term price regime and a fast- tracked approval process. These aspects make the project low risk to the Company in the construction phase and attractive to potential future purchasers / investors once operational.

Following any FID and successful commercial negotiation of construction contracts, total gross capex for the Project is currently anticipated to be approximately US$2.6 million. Subject to FID, construction is expected to begin in Q2 2022 and to complete in Q3 2023. 

Whilst Echo will maintain a controlling equity interest in the Project SPV, on the ground, the Project will be led by LAS, who have demonstrated their expertise by managing solar projects through construction to operation, most recently, a similar 3 MW solar plant with another international partner. The Company’s partnership with LAS also provides access to LAS’ pipeline of similar solar projects already in the planning stage, which can be used by the Company to scale up the renewables business.  The Company expects to be able to secure project finance to fund this project in due course.

Terms of the Option agreement

The transaction has been structured to ensure that the project is low risk to the Company, whilst providing exposure to the potential upside associated with the interest, with no capital risk prior to FID. LAS are responsible for any remaining costs prior to the exercise of the Option and FID and the timing of FID is controlled by the Company. 

Following a FID, when the Project cost has been accurately defined with contracts, the Company will fund 100% of the Project capex in the form of a loan to the Project SPV. In the event of any future sale of the Project post-construction, the proceeds would be utilised to cover the 4% per annum interest on the loan, the loan principal and a US$100k historical cost reimbursement to LAS. The remaining net proceeds would then be distributed according to the partner’s working interests.  

If following construction, the attractiveness of pricing in the wholesale power markets is such that the JV believes it would be preferable to retain the project and sell electricity into the grid, the cash flows generated from electricity sales will be used to satisfy the historical cost repayment obligations in the same way. As at 31 December 2021 the Project SPV had estimated net assets of approximately US$100,000.

Key Project milestones

Currently the Project is approaching Ready-To-Build (“RTB”) status, with LAS securing permits with relevant authorities and finalising the Engineering, Procurement & Construction (“EPC”) contract and the provision of solar panels. Following successful FID, it is expected that the Project would begin construction around Q2 2022. The completion of construction and commencement of commercial operations, when electricity is supplied to the grid, is currently anticipated around Q3 2023.

Echo Energy post transaction

This transaction is the next step towards becoming a full spectrum energy company leveraging the Company’s Latin America strategic focus and strong relationships. The Company’s base business in the Santa Cruz Sur assets in Argentina remains robust and a vital component of the ongoing business. In combination this transaction provides the Company with the ability, on exercise of the option, to better diversify the Company’s portfolio, across commodity type and country risk, yet is still positioned to take advantage of strengthening oil and gas prices and production enhancement opportunities. Going forward the Company is well positioned to grow its renewables business and provide stable cash flows to further support investment activities in Santa Cruz Sur.

The Company continues to evaluate other opportunities in the renewable energy space in Latin America with its local partners, alongside its existing investment programme including the ongoing well workover programme in its Santa Cruz Sur portfolio. This innovative, low risk structure transaction is indicative of how the Company will aim to bring further assets into the Company at a low upfront cost to shareholders.

Issue of equity and warrants

The Company announces that it has raised gross proceeds of £660,000 through the issue of 143,478,260 new ordinary shares in the Company (the “Subscription Shares”) at 0.46 pence per share (the “Subscription Price”) to new investors pursuant to a direct subscription with the Company (the “Subscription”), conditional on admission of the Subscription Shares to trading on AIM.

In connection with the Subscription, the Company has  issued 65,217,391 warrants to subscribe for new Ordinary Shares exercisable at 0.65 pence per new Ordinary Share at any time until the second anniversary of issue (the “First Subscription Warrants”) subject to admission of the Subscription Shares to trading on AIM.  

In addition, the Company has also conditionally agreed to issue a further 78,260,869 warrants to subscribe for new Ordinary Shares exercisable at 0.65 pence per new Ordinary Share at any time until the second anniversary of issue (the “Second Subscription Warrants”) subject to the receipt of the necessary share issuance authorities at the Company’s 2022 annual general meeting.

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 24 January 2022.

The net proceeds of the Subscription of approximately £600,000 will add to the Company’s working capital resources and be applied towards the formation of the solar project Joint Venture to construct and operate the Project. As at 30 December 2021 the Company’s unaudited cash balance, excluding Echo’s 70% entitlement to cash balances held by the Santa Cruz Sur joint venture in Argentina, was approximately US$520,000.

Following Admission, the Company’s issued share capital will comprise 1,452,491,345 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.  

Martin Hull, Chief Executive Officer of Echo Energy, commented:

“I am very pleased to be able to announce our first steps into the solar energy space via the entry of the partnership with LAS and this option agreement. The resultant JV represents what we hope will be the start of a long and fruitful relationship with LAS. This agreement is another example of Echo leveraging its in-house transactional capabilities to bring exciting and potentially highly value accretive assets into the business while at the same time minimising upfront cost to its shareholders.

Our Santa Cruz Sur assets provide Echo with a very robust base business, highlighted by the strong production numbers at the start of this year, and a strong foundation on which to add a new business segment. Chile is a sweet spot for renewable energy in Latin America, and our entry to the region diversifies our geographic footprint whilst providing near term catalysts as we progress the new project.

Our focus remains on balancing risk and reward in the most efficient way possible for our shareholders – as we broaden the range of our energy investment opportunities, we will be able to identify the best paths to value creation across both hydrocarbons and renewables, whilst also positioning the business for the energy transition. 

For further information, please contact:

 

Echo Energy

Martin Hull, Chief Executive Officer

 

via Vigo Communications

Vigo Consulting (IR & 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)

Anita Ghanekar

 

+44 (0) 20 7408 4090

Vox Market Podcast – Alan Green discusses: Watches of Switzerland #WOSG, Echo Energy #ECHO,  Bidstack #BIDS 

vox podcast

Alan Green on the Vox Market Podcast discusses:

Watches of Switzerland #WOSG
Echo Energy #ECHO Bidstack #BIDS
https://www.voxmarkets.co.uk/articles/new-article-e92a8cc/

#ECHO Echo Energy – Operational Update

echo

Echo Energy, the Latin American focused energy company, is pleased to provide an operational update regarding its Santa Cruz Sur assets, onshore Argentina for Q4 2021 to 30 November 2021.

 

Daily operations across the asset base in Santa Cruz Sur and the delivery of produced gas to industrial customers under contract have continued uninterrupted during the first two months of Q4 2021. Production over the period from 1 January 2021 to 30 November 2021 reached an aggregate of 523,735 boe net to Echo, including 74,605 bbls of oil and condensate and 2,695 mmscf of gas.

 

As a result of the completion of capacity increasing infrastructure works, gas production in November 2021 averaged 7.1 MMscf/d net to Echo, an increase over the 6.7 MMscf/d net production rate during the previous month.

 

Net liquids production in the first two months of Q4 2021 averaged 255 bopd, and is an increase of 31% over Q1 2021   levels prior to the commencement of production optimisation and the bringing of shut in wells back on line. The benefit of both infrastructure maintenance and the previously announced commercial focus on high-quality blends at Santa Cruz Sur has also led to an increased frequency of oil sales during Q4 2021 to date, with total liquids sales net to Echo in  quarter four to date of 16,855 bbls (Q3 2021 total of: 15,050 bbls).  This increase in liquids production has helped to offset the expected natural decline in gas production over the year.

 

The Company looks forward to updating shareholders on production levels on a quarterly basis going forward.

For further information, please contact:

 

Echo Energy

Martin Hull, Chief Executive Officer

 

via Vigo Communications

Vigo Consulting (IR & 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)

+44 (0) 20 7408 4090

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