Two companies suspend production at some sites in response to low oil price

Two UK onshore companies announced today they were temporarily shutting-in some sites to cut production following falling oil and gas prices

A statement from IGas said it would suspend production at a number of sites in May and June 2020. Affected staff would be furloughed under the government scheme.

This would reduce production by about 600 barrels of oil per day (boepd), the company said. Based on average figures for 2019, this represents about a quarter of IGas production.

The statement said: “We will review the situation in mid-June 2020 to reassess the oil price and the situation regarding the furlough scheme and update the market as appropriate.”

The company said it had hedged 50,000 barrels of oil, about 90% of expected production, at an average price of $53/barrel in May and June 2020. At the time of writing, the price of the UK benchmark Brent crude was $27.11/barrel. Savings in operating costs from the shut-ins would add around £500,000 to the balance sheet for these two months, IGas said.

Chief executive Stephen Bowler said: “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.”

Lidsey

Angus Energy said it was suspending production at its oil site at Lidsey in West Sussex.

In a statement today, the company said it would carry out maintenance work on wells and pumps at the site.

It said: “We aim, subject to an acceptable prevailing oil price, to restart production in the summer.”

The company added that was investing “a modest sum” into investigating new uses for its wells, including geothermal heat generation.

Official figures from 2019 show that Lidsey was Angus Energy’s only producing site.