Echo has announced in an oil price volatility statement, that the significant decline in oil prices has made operations at the Santa Cruz Sur assets currently not cash flow positive beyond the short term even if supplemented by the proceeds of the recent additional facility. The company is exploring all options to cut costs at a corporate level and has prioritised a number of field operating cost reductions noting that gas prices are expected to rise in the coming winter period.
It is also possible that Echo may be helped by measures that might be taken by the Argentinian Government which historically have been supportive of the domestic E&P industry. Such measures have included a prop for the oil price which has tended to remain higher in-country than on the international market.
Kosmos has announced measure to counter the oil price fall, initially it will cut capex, probably by around $100m. With regard to current and short term production there is little change in guidance although some longer term plays such as Tortue Phase One may be delayed or hopefully farmed-down.
Other operational cuts and the cutting or passing of the dividend will mean that Kosmos will be fcf neutral at around $35, about ok but shows how strong the company is.