Echelon Faces Production Risks as Sampang Declines Steepen and Maintenance Looms
Echelon Resources reported a solid quarter with production gains at Maari and Mahato fields, supported by new wells and a strategic gas sales agreement, while maintaining shareholder returns through dividends.
- Two new wells at Mahato add 2,000 barrels per day
- Maari field achieves highest production in five years
- Group dividend payment of A$3.5 million
- Production receipts increase 3.7% quarter-on-quarter
- Ongoing development and exploration across Australian and Indonesian assets
Quarterly Performance Overview
Echelon Resources Limited delivered a mixed yet encouraging quarterly report for Q3 2025, balancing natural production declines with operational successes. While total production volumes dipped slightly by 2.6%, this was offset by an 8% increase in output at the Maari and Mahato fields, culminating in a total production of 414,779 barrels of oil equivalent for the quarter.
The company’s strategic focus on optimising existing assets while advancing growth opportunities remains evident. Two new wells drilled at Mahato contributed an additional 2,000 barrels per day, reinforcing the field’s production capacity. Meanwhile, Maari recorded its highest monthly average production in over five years, hitting more than 5,600 barrels per day in August.
Financial Health and Shareholder Returns
Financially, Echelon maintained a robust cash position with A$33.1 million at quarter-end, despite a slight decrease from the previous quarter due to a A$5 million debt repayment and dividend distributions. Production receipts rose 3.7% to A$30.7 million, reflecting improved timing of oil liftings, particularly from Maari.
The group paid a total dividend of A$3.5 million during the quarter, with A$1.7 million allocated to Echelon shareholders, underscoring the company’s commitment to delivering shareholder value alongside operational growth.
Development and Exploration Progress
Development activities continued apace, especially at Mahato where further drilling is planned following the success of recent wells. The operator aims to propose a Phase 3 development plan targeting production expansion from the Telisa reservoir in 2026. Exploration efforts also advanced with planning for seismic acquisition in EP145, supported by positive engagement with Traditional Owners.
In Australia’s Northern Territory, gas production from the Mereenie field continues to exceed expectations, bolstered by a recent reserves upgrade. The award of a new gas sales agreement with McArthur River Mines further validates the strategic value of Echelon’s local gas assets.
Operational Challenges and Outlook
Challenges remain, notably the steeper-than-expected decline at the Sampang fields in Indonesia due to water production issues, and ongoing maintenance at the Kupe field in New Zealand. However, planned interventions and infrastructure upgrades, such as compressor installation at Grati, aim to mitigate these impacts.
Looking ahead, the extension of the Maari permit to 2037 provides long-term operational certainty, while upcoming drilling and seismic activities across multiple assets signal continued momentum. Echelon’s balanced approach of managing mature fields while pursuing new opportunities positions it well for sustainable growth.
Bottom Line?
Echelon’s blend of steady production gains, disciplined financial management, and strategic development sets the stage for continued value creation amid evolving market conditions.
Questions in the middle?
- How will the planned Phase 3 development at Mahato impact production volumes and costs?
- What are the prospects and timelines for final approvals on the Sampang PSC extension and Paus Biru development?
- How might operational challenges at Sampang and Kupe influence Echelon’s overall production and cash flow in 2026?
