UK's IGas Shuts in Sites Amid Weak Prices

London-listed producer IGas Energy said on May 1 it would temporarily shut-in a number of sites during May and June, reducing production by around 600 barrels of oil equivalent/day, in response to the collapse in oil and gas prices.

With Brent trading at around $25/b and gas prices at £0.15 ($0.19)/therm, the closures are "prudent," IGas said in a stock exchange filing. The company has hedged 50,000 barrels of oil at an average price of $53/b in May and June, representing 90% of expected output in the two months.

"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," CEO Stephen Bowler said.

The shut-ins will result in a £500,000 gain in cash flow, IGas said. Affected employees will be furloughed as per the UK government's jobs retention scheme, which compensates employers 80% of the wages of furloughed workers up to monthly limit of £2,500. IGas will review the situation in mid-June, taking into account oil prices and the circumstances regarding the furlough scheme.

IGas operates onshore oil and gas fields in the East Midlands, the northwest and southern England, as well as Scotland.