The exploration and production company, IGas, said today it was reviewing its capital spending plans with the increase in the oil price.
The company’s chief executive, Stephen Bowler, said in a statement:
“As the oil price improves, we will revisit our capital spending plans to accelerate projects with a high return on investment, demonstrating the flexibility that having the operatorship of our portfolio brings.”
Brent Crude was trading around $44 a barrel today. It was below $20 for a short time in late April.
In March 2020, IGas said it had reduced capital spending following the oil price fall. Operations were limited to maintenance, abandonment and projects already underway.
In June 2020, the company announced redundancies, including the chief finance officer, in a £1m cost cutting. The company also said it was giving up the lease on its London office and reducing board salaries and benefits.
Earlier this month, IGas confirmed it had put on hold plans for two wells in the Weald, targeting the Portland sandstone and Kimmeridge micrities. It also declared a pre-tax loss of £59.1m for 2019, up from £25.1m in 2018.
IGas operates almost half the UK’s onshore oil and gas production sites (25 out of 56).
It is the largest UK onshore operator by number of sites and the second largest by oil production (after Perenco, which operates the Wytch Farm field in Dorset).
IGas also operates suspended shale gas exploration sites at Misson in north Nottinghamshire and Ellesmere Port in Cheshire.
A decision from the local government secretary is awaited on a well test at Ellesmere Port. An application to frack at Misson, planned for 2019, was delayed by the government moratorium on the operation in England, the company said.
Water injection projects
News of the spending review came in a statement to investors mainly about water injection projects in Lincolnshire.
IGas said water injection had begun at Scampton North site on schedule and on budget. This operation aimed to increase oil production and would also provide an infield pipeline and new separation facility. The company said the project would increase the amount of gas available for power generation, reduce venting and the need to truck water to the Welton Gathering Centre.
A second waterflood project in the Welton Field was still due to begin in late summer 2020, IGas said.
Mr Bowler said:
“Projects such as these provide strong economic returns even at these low oil prices, with environmental benefits, and continue to demonstrate the value of our producing and development assets.”