LONDON (ShareCast) - (Sharecast News) - IGas Energy updated shareholders on further actions it had taken to mitigate the impact of continued low oil prices during the Covid-19 coronavirus pandemic on Friday.
The AIM-traded firm had said on 9 April that it would continue to keep costs under review in the light of continued oil price and market volatility.

While all of its operations were still functioning effectively, it said on Friday that it considered it prudent - with Brent at around $25 per barrel and gas prices at about 15p per therm - to temporarily shut-in a number of sites during the months of May and June.

The impact of the shut-in would be to reduce production by around 600 barrels of oil equivalent per day for the period.

IGas said it had 50,000 barrels hedged at an average price of $53 in May and June, and that would now represent about 90% of expected production.

The board said that, due to the anticipated reduction in operating costs associated with the shut-in sites, the action would have a positive impact on cash flow during the two months, of around ?0.5m.

It said the employees impacted would be furloughed, in line with the government scheme.

The board said it would review the situation in mid-June to reassess the oil price, and the situation regarding the furlough scheme, and update the market as appropriate.

"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," said chief executive officer Stephen Bowler.

"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.

"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."

At 1506 bST, shares in IGas Energy were down 3.72% at 27.92p.

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