(Sharecast News) - Europa Oil & Gas updated the market in light of the Covid-19 coronavirus pandemic on Tuesday, and the associated market volatility and oil price weakness.
The AIM-traded firm said that following a "comprehensive review and cost reduction programme", existing cash reserves were expected to be sufficient to finance its current and upcoming activity, including the Wressle Field Development Project, ongoing farmout activities and reduced work programmes offshore Ireland and Morocco, without the need for additional external funding.
On 18 March, the company issued an update on the Wressle Field Development Project in North Lincolnshire, highlighting studies carried out by the operator, Egdon Resources.
It said that, with an estimated breakeven oil price of $17.62 per barrel, the project was economically robust at current oil prices.
Under the development plan, Wressle was expected to start production at an initial gross rate of 500 barrels of oil per day, which would more than double Europa's existing UK onshore production to more than 200 barrels per day.
On current plans first oil at Wressle, in which Europa holds a 30% working interest, was envisaged during the second half of 2020.
On the corporate front, in response to the current oil price environment, Europa said it had implemented a programme of cost reductions including salary cuts, and the cancellation of non-core contracts.
In Ireland, a review of the portfolio to avoid unnecessary licence costs could lead to further relinquishments and intangible asset write offs.
Meanwhile in Morocco, Europa said it intended to delay its current work programme, which primarily comprised 3D seismic reprocessing.
Should the oil price not improve by the end of 2020, further economies were planned to maintain positive operating cash flow.
"These are challenging times for the oil and gas exploration and production industry with the combination of market turbulence and depressed oil prices," said interim chief executive Simon Oddie.
"We have responded by making appropriate cost savings and adjustments in the business whilst maintaining the integrity of our core strategy.
"Further economies will be made if conditions do not improve in the medium term."
At 1408 BST, shares in Europa Oil & Gas were down 7.14% at 0.65p.
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