Industry

IGas reveals impact of Covid-19

IGas blamed the Covid-19 outbreak and a low oil price for falls in production and revenue, along with a rise in debt, in the first half of the year.

The company’s interim results published today, warned that uncertainty remained and future impacts on the business were possible.

It said a continuing low oil price could “cast doubt on the group’s ability to continue as a going concern” in the rest of 2020.

IGas shut about 15 sites at the start of the Covid-19 outbreak amid falling oil prices. Five sites remain closed, the company said today.

The accounts show revenues fell more than 50% to £10.5m, down from £21.2m in the same period in 2019.

Production was down 18% at 1,940 barrels of oil equivalent per day (boepd), compared with 2,360 boepd in the first half of last year. Annual net production has been downgraded to 1,850-2,050 boepd, from 2,250-2,450 boepd estimated in April 2020.

In the first half of 2020, cash balances fell more than 80% to £2.6m, down from £14.4m a year ago. Operating cash flow fell 78% at £1.9m, compared with £8.7m.

Debt increased 90% from 5.9m in the first six months of 2019, up from £11.2m for the same period this year.

Chief executive, Stephen Bowler, said the group expected it could continue for the foreseeable future. But he warned:

“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.

“if oil prices remain low for a prolonged period of time, we cannot rule out future impacts on the business.”

DrillOrDrop previously reported savings at IGas in redundancies, salary replacement for directors and a proposed reduction in benefits. Gross cash savings at the end of September 2020 were expected to be £1.6m, IGas said today.

It said capital expenditure had been cut to concentrate on maintenance, abandonment and projects already underway. Work on other projects had been temporarily delayed until energy prices improved.

Water injection began at Scampton North in Lincolnshire in July 2020. The Welton waterflood project was delayed and is now due to be completed in early 2021.

IGas announced last week that it had acquired the geothermal company, GT Energy. The accounts said all IGas operated fields were being assessed for other development opportunities, including Carbon Capture and Storage (CCS) and geothermal energy.

The decision on whether to allow flow testing at IGas’s Ellesmere Port shale gas site is still awaited. An announcement by the local government secretary had been expected in April 2020.  IGas said it had written recently to the government to “seek a decision as soon as possible”.

Key figures

Revenue: £10.5m; six months to June 2019 £21.2m

Sales: 335,687 barrels of oil (including third party oil), 4,411 Mwh of electricity and 966,445 therms of gas; six months to June 2019  409,470 barrels of oil, 9,000 Mwh of electricity and 746,410 therms of gas

Adjusted earnings before interest, tax and depreciation (EBITDA): £2.2m; six months to June 2019 £7.7m

(Loss) and profit after tax from continuing activities: (£30.0m); six months to June 2019 £0.8m

Operating cash flow: £1.9m; six months to June 2019 £8.7m

Net debt: £11.2m; six months to June 2019 £5.9m

Cash and cash equivalents: £2.6m; six months to June 2019 £14.4m

Net production: 1,940 boepd; six months to June 2019 2,360 boepd

Cost of sales: £12.9m; six months to June 2019 £14.2m

Administrative costs: £2.8m; six months to June 2019 £2.5m

Investments in asset base: £4.9m; six months to June 2019 £3.4m

Investment in conventional assets (mainly Scampton and Welton): £3.5m; six months to June 2019 £1.6m

Investment in shale programme and conventional exploration opportunities: £1.4m; six months to June 2019 £1.8m

Net assets: £84.4m; six months to June 2019 £113.1m

Underlying cash operating costs: £10.2m; six months to June 2019 £10.6m

7 replies »

  1. https://www.bbc.co.uk/news/uk-england-beds-bucks-herts-54248281

    “A town in Bedfordshire has experienced two earthquakes in one day.
    It is the third and fourth time people in Leighton Buzzard have felt tremors in the space of two weeks.
    The British Geological Survey (BGS) confirmed a 3.0-magnitude earthquake happened just north of the town at about 09:30 BST and a 2.1-magnitude tremor occurred at about 13:40.
    People reported their houses “jolting and shaking” when the larger quake struck.
    Since 8 September there have been four earthquakes in the town, the BGS confirmed.
    A 3.5-magnitude earthquake was felt by residents on that day, followed by a 2.1 magnitude tremor on 13 September.”

    Perhaps residents of the Fylde can help local residents in Leighton Buzzard seek compensation? After all a couple of pictures “fell off the wall”.

  2. OMG!

    2.29am- to post such profound speculation. Hardly in the grouping of the past authors penning their prose by the light of a candle to educate, inform and entertain the masses. But there you go-that’s what fossil fuels bring to the table-or lap top. Progress??

    To replace such wishful thinking, the reality would show that either fund raising is conducted where required or another company takes over, if that becomes necessary. Not exciting enough for an explanation mark.

    • I gas on it’s way out. Share price shows how much money the small time investors have lost over the last few years. Still a bit of time left to squeeze the last few pennies out of those who have not been keeping up.

      • Taken a look at Tesla share price, jP?

        And some saboteur has implied that some time in the future they MIGHT produce an affordable product. Goodness, that must have come from someone who is a fossil fool! Well it actually came from Mr. Musk himself-AGAIN. Wiped $50 billion away from those who have not been keeping up.

        Interesting that the horse’s mouth is so willing to admit he “dreams” of an affordable electric car. Well, his dream will be a long way from reality whilst oil prices are so low and making petrol and diesel so cheap. Conflict there. Cheap oil a problem to Igas. Cheap oil a problem for electric vehicles. More subsidies for alternatives? Difficult in the aftermath of Covid-19.

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