IGas today provides the following statement in advance of the Company's AGM which is being held at 10.30am today.
Cuth McDowell, Interim Non-executive Chairman said:
"I would like to begin by paying a tribute to all of our staff who have been working so hard to keep the business running and providing vital support to the country, by continuing to produce oil and gas onshore, during these most unpredictable and challenging of times.
The health and wellbeing of our people, partners and the communities in which we operate remains the Company 's overriding priority. As key workers , activity across the business has continued with strict adherence to Government advice and the Company adapted quickly to remote working, where possible, in March. Our procedures remain under regular review to maintain safe working environments and stay in line with the most recent government guidance.
Reflecting on our 2019 results, we continued to deliver on our strategic priorities and set about further reducing our financing costs through a $40 million Reserve Based Lending facility (RBL), which was secured in October 2019. I am pleased to announce today that we have successfully completed the RBL redetermination (a semi-annual recalculation), confirming US$29 million (£23.3 million) of debt capacity and current headroom of US$13 million (£10.5 million).
Operationally, in 2019, we delivered production well within guidance, made progress in advancing incremental production projects and made a potentially world-class discovery at our Springs Road well site.
As is well documented, the early part of 2020 has been a turbulent one for not only this industry, but for each and every one of us. We have had to re-evaluate short term priorities to weather the oil price disruption and COVID-19 impacts.
As announced on 1 May, we took the prudent decision to temporarily shut-in a number of sites during May and June, which will have a positive impact on our cash flow during these two months of c.£500kand will reduce production by c.600 boepd for this period. We have accessed the Government's Job Retention Scheme with approximately 40 employees currently placed on furlough. We continue to review the number of shut-in sites on a regular basis and we will monitor the oil price and the furlough scheme to see when production should be restarted. Whilst this action demonstrates our focus on conserving cash it will have an impact on our production for the full year and once we have fully reviewed the shut-in production situation we will update the market with new guidance.
In light of ongoing oil price and market volatility we are currently undertaking a further, in-depth review of G&A costs.
As at 31 May 2020 cash balances were £2.2 million and net debt was £10.8 million. As at 1 June 2020, the Group had hedged a total of 200,000 bbls for the remainder of 2020 at an average rate of $54.3/bbl. We have also hedged $7 million into sterling at an average rate of $1.17:£1 for the remainder of 2020.
In the longer term, we will continue to drive the business forward to maximise the value of our existing assets, many of which still have significant potential. We will seek to develop new assets to deliver future shareholder value as we position ourselves to play an important role in the UK's energy transition.
In due course, I am sure that we will be able to reflect upon the unprecedented challenges that the COVID-19 pandemic has brought with pride in the way in which the organisation and the infrastructure of the business has stood up."