UK’s onshore oil and gas company IGas Energy said on Friday it will temporarily shut-in a number of sites and furlough employees for two months, Kallanish Energy reports.
The move is aimed at mitigating the impact low oil and gas prices are having in the company, during the Covid-19 lockdown period. Fields will be shut during the months of May and June, reducing production by roughly 600 barrels of oil equivalent per day (Boe/d).
“Whilst all of the group’s operations continue to function effectively, we consider it prudent, with Brent at $25 a barrel and gas prices at around 15 pence per therm, to temporarily shut-in a number of sites,” the firm said in a statement.
IGas will take advantage of the UK government’s scheme for job retention, under which employees can be furloughed and the government will pay 80% of their salaries.
The junior producer expects the reduction in operating costs associated with the closure to have a positive impact on cash flow during these two months of around £500,000 ($624,755).
“We have 50,000 barrels hedged at an average price of $53/Bbl in May and June, and this will now represent roughly 90% of expected production,” IGas said.
CEO Stephen Bowler said that the company has the flexibility to shut-in production and the ability to rapidly restore it, once energy prices improve. Management will review the situation in mid-June.
“We continue to make the health and safety of our staff and local communities our priority whilst actively managing our asset base for the benefit of our shareholders,” Bowler said.
“We believe we have positioned the business as well as possible to weather the current unprecedented market conditions and will continue to take further actions as and when appropriate,” he added.
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