IGas has announced redundancies, including the chief finance officer, in a £1m cost-cutting programme.
Julian Tedder, who has held the finance post for five years, will step down next month. His responsibilities will transfer to the group financial controller.
The company is also giving up the lease on its London office in September 2020.
Earlier this year, the company warned in its annual accounts:
“should oil price or demand (and therefore revenue) fall further, the Company may not have sufficient funds available for 12 months from the date of approval of these financial statements.”
In a statement to investors today, IGas said it had cut annual costs of about £600,000 so far this year. But it was now undertaking further reductions to save about £1m.
The company said it also proposed to reduce benefits and replace 15% of the salary for almost all board members and senior executives with share options.
The statement said:
“These measures are expected to reduce costs by a further c. £1.0 million such that from end of September 2020, our gross cash savings as compared to 2019 are anticipated to be c. £1.6 million per annum. The one-off cost of implementing these measures is c. £550,000 and will be incurred in 2020.”
The chief executive, Stephen Bowler, said:
“Like many other organisations across all sectors of the economy, we need to preserve cash and however difficult the decision, these are unfortunately very necessary steps which we need to take to be as well placed as possible for the future.”
IGas shut in a number of sites nearly two months ago when oil was trading at $25 a barrel.
Nine IGas fields have resumed production following an improvement in the oil price, the company said today. Some staff, who had been furloughed, have returned to work.
But the company said a further six sites, as well as the Albury gas-to-grid operation, remained shut-in, accounting for 320 barrels of oil equivalent per day (boepd).
The company said it continued to be affected by supply chain interruptions, constraints on the availability of resources and well servicing issues.
“We estimate that the resultant project delivery delays and lower productivity levels will have an annualised impact of c. 150 boepd.”
IGas also downgraded its annual production estimates. In April, it predicted that 2020 production would range from 2,250-2,450 boepd. It now stands at 1,850-2,050 boepd.