LONDON (Reuters) - British oil and gas exploration company IGas Energy (IGAS.L) 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