Echo Energy plc, the Latin American focused upstream oil and gas company, is pleased to provide an update on the resumption of the Argentine value added tax ("VAT") reclaim process, and the successful monetisation of an initial proportion of the Argentine VAT owed to the Company.
The VAT reclaims relate to operations from the Company's 70% non-operated working interest in the Santa Cruz Sur assets, onshore Argentina and, as confirmed in the Company's Interim results for the period ended 30 June 2020, had previously been delayed as a result of Argentinian lock downs as a result of the COVID-19 pandemic. Currently, VAT owed to Echo subsidiaries Eco Energy TA Op Limited (TA) and Eco Energy CDL Op Limited (CDL) now totals US$ 1.4 million.
Disbursements of Ars$ 4million (approximately US$ 49,000) now received, and resumed processing of further sums by AFIP (Administración Federal de Ingresos Públicos) in Argentina, demonstrate a re-commencement of activity in country following months of COVID-19 related shutdown, and an encouraging development despite international borders currently being still effectively closed.
In addition to cash proceeds now received, and with increased AFIP collaboration, the Company has been able to monetise a further Ars$ 3.5 million (approximately US$ 43,000) of VAT credits via the exchange of VAT credits in lieu of consultancy services with suppliers to the Company.
The Company considers that the monetisation of these initial credits, together with an enhanced level of AFIP collaboration, is a visible demonstration of business opening up within the current COVID-19 restrictions in Argentina. Given the Company's material outstanding VAT credit position, these events provide the Board with optimism as regards to renewed expectations of near-term future additional cash VAT receipts.
The outstanding US$ 1.4 million of VAT owed to the Company will, when received, will provide the Company with significantly increased flexibility with regard to its strategic plans and operational priorities.
