LONDON, May 1 (Reuters) - British oil and gas exploration
company IGas Energy said on Friday it will temporarily
shut-in a number of sites during May and June to reduce
production due to low prices of oil and natural gas.
With Brent crude oil at around $25 a barrel and UK gas
prices at around 15 pence per therm, the firm said it has
decided to shut-in some sites even though its operations
continue effectively.
This will result in a production reduction of around 600
barrels of oil equivalent per day.
The firm said it has 50,000 barrels of oil hedged at an
average price of $53 a barrel in May and June 2020 and this will
now represent around 90% of expected production.
IGas Energy produces around 2,200 barrels of oil equivalent
per day from over 100 sites across the country.
The firm said that due to the anticipated reduction in
operating costs associated with the shut-in sites, there will be
a positive impact on cash flow during these two months of around
£500,000.
Those employees impacted will be furloughed in line with a
government scheme, it added.
"As the majority of our sites are owned and operated by us
100%, it gives us the flexibility to be able to temporarily
shut-in a number of sites and the ability to rapidly restore
production, at those sites, once energy prices improve," chief
executive Stephen Bowler said.
IGas said it will review the situation in mid June to
reassess the oil price and the furlough scheme.
(Reporting by Nina Chestney, Editing by Kirsten Donovan)
