Coronavirus in Scotland: Oil and gas firms take virus and price-drop hit

Cairn Energy has signalled cost-cutting plans as the oil price drop and coronavirus bite.

The Edinburgh-based oil and gas firm said significant reductions and deferrals have been identified, which represent an overall 23 per cent reduction in capital expenditure for the year.

Further projects are “under active discussion” with joint venture partners and other stakeholders.

Planned 2020 capital expenditure on the UK producing assets is expected to be below $45 million, reduced from the original forecast of $65m.

Simon Thomson, chief executive of Cairn Energy, said the firm has “moved quickly to adjust our forward capital programme to current market conditions”.

He said: “Our balance sheet remains strong and we are proactively reviewing options for further capital expenditure savings and deferrals, whilst retaining the financial flexibility to add value on an ongoing basis.”

Bowleven, which moved its headquarters from Edinburgh to London after a boardroom coup, flagged ongoing market volatility caused by the Covid-19 global pandemic and the recent fall in global oil prices in a six-month update to December 31 2019, saying these factors “could potentially have an adverse effect on the Etinde project timeline”. A $1.4m loss was unchanged.

Eli Chahin, chief executive of Bowleven, said: “At a time of considerable market turbulence, we are fortunate to benefit from a robust financial position, with in excess of $10 million of cash on the balance sheet and no debt.”

It said a further $2.3m is held in financial investments.

Aberdeen-based Parkmead also reported interim results for the six-month period ended December 31 2019 with revenue for the period dropping to £2.1m against £5.3m, “principally due to the considerable reduction in gas prices”. Gross profit was £800,000 against £3.8m.

Meanwhile, Hurricane Energy said a crew member on the Aoka Mizu vessel at the Lancaster field west of Shetland is being treated on the mainland after becoming unwell and then testing positive for Covid-19.

Source: The Herald