Exploration Setback in Perth Basin Tests Echelon’s Growth Amid EP145 Deal
Echelon Resources delivered a robust March 2025 quarter with production volumes up 5% and development wells at Mereenie surpassing expectations. The company also moved to acquire full operatorship of EP145 in the Amadeus Basin, signaling strategic growth despite exploration setbacks.
- Production volumes increased 5% to 432,045 boe; daily rate up 7% to 4,800 boe/day
- Mereenie two-well development campaign exceeded pre-drill expectations, lifting field capacity
- Acquisition of 100% and operatorship of EP145 in Amadeus Basin pending regulatory approval
- Dividend payment of AUD 1.5 cents per share totaling A$6.9 million
- Perth Basin Becos exploration well drilled but found no economic hydrocarbons
Operational Momentum in the Amadeus Basin
Echelon Resources Limited reported a solid operational quarter ending 31 March 2025, highlighted by a successful two-well development campaign at Mereenie in the Amadeus Basin. Both West Mereenie 29 and 30 wells outperformed pre-drill production forecasts, boosting field capacity to over 32 terajoules per day. This achievement not only underscores the field’s robust potential but also strengthens Echelon’s supply contracts to the Northern Territory and East Coast markets, providing a stable revenue foundation.
The reopening of the Northern Gas Pipeline in March further enhanced Echelon’s market flexibility, allowing increased gas sales beyond the local region. This infrastructure development is timely, complementing the company’s production growth and supporting its strategic ambitions in the basin.
Strategic Acquisition and Exploration Update
In a significant move, Echelon executed a sales and purchase agreement to acquire 100% ownership and operatorship of permit EP145, adjacent to Mereenie. This acquisition, subject to customary regulatory approvals, includes an existing discovery and promising exploration targets. Early technical assessments are underway, including plans for 3D seismic acquisition, which could unlock further value and development opportunities in the Amadeus Basin.
Conversely, exploration efforts in the Perth Basin faced a setback with the Becos-1 well failing to encounter economic hydrocarbons. Drilled to a depth of 1,107 meters, the well was safely plugged and abandoned ahead of schedule. The joint venture is now reassessing the block’s prospects in light of this outcome, which may influence future exploration strategies in the region.
Financial Performance and Capital Management
Financially, Echelon demonstrated resilience with production receipts rising 11.2% quarter-on-quarter to A$30.3 million, driven by new gas sale agreements and timing of oil receipts. Operating cash flow remained steady at A$14.8 million, while investing cash flow increased significantly to A$16.3 million, reflecting active development in the Amadeus Basin and Mahato PSC in Indonesia.
The company paid dividends totaling A$6.9 million, including A$3.4 million to Echelon shareholders, signaling confidence in cash generation despite a quarter-end cash balance decline to A$36.8 million. This reduction was partially offset by a A$5 million debt drawdown and an A$11 million cash contribution from Cue Energy Resources, in which Echelon holds a near 50% interest.
Broader Asset Portfolio and Future Outlook
Beyond Australia, Echelon’s Indonesian and New Zealand assets continue to contribute to production and development. The Mahato PSC in Sumatra saw three development wells drilled during the quarter, maintaining production above 6,200 barrels of oil per day. In New Zealand, steady output from the Kupe oil and gas field aligns with expectations, with ongoing evaluations for production optimisation.
Meanwhile, the Maari field in New Zealand reported strong production averaging over 5,400 barrels per day, although recent well faults have temporarily taken some production offline. Permit extension applications remain pending, adding an element of regulatory uncertainty to the asset’s medium-term outlook.
Looking ahead, Echelon’s focus remains on measured, value-led growth. The company is advancing exploration and appraisal activities, including potential infill wells and seismic surveys, while managing operational efficiencies and capital discipline across its portfolio.
Bottom Line?
Echelon’s blend of operational success and strategic acquisitions sets the stage for growth, but exploration challenges and regulatory approvals will be key to watch.
Questions in the middle?
- Will regulatory approval for the EP145 acquisition be granted on schedule, and what impact will it have on production?
- How will the Perth Basin exploration setback influence Echelon’s future exploration and capital allocation?
- What are the implications of the pending Maari permit extension for production continuity and asset valuation?
