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Europa Oil & Gas launches review and cost cutting programme

The oiler has funds for the Wressle project, meanwhile, activities in Morocco are being delayed and it could relinquish more Irish exploration acreage

Europa Oil & Gas launches review and cost cutting programme

Europa Oil & Gas Holdings PLC (LON:EOG) told investors it is cutting costs in response to the coronavirus (COVID-19) along with the associated stock market volatility and oil price weakness.

In a statement, the group added that it aims to conduct a comprehensive review and a phase of cost reductions across the company in order to retain enough cash to fund current and upcoming activity, including the Wressle field development project.

Farm-outs will continue to be sought, albeit work programmes in Ireland and Morocco are due to be reduced, it said.

READ: Europa’s Wressle oil project confirmed as “economically robust”

Europa has already implemented a programme of salary cuts and the cancellation of non-core contracts.

A review of the Irish portfolio may result in further asset relinquishments so that the company can avoid unnecessary costs. That would also see write-offs in the accounts.

In Morocco, the company plans to delay its current work - which mostly involves the reprocessing of 3D seismic data.

“These are challenging times for the oil and gas exploration and production industry with the combination of market turbulence and depressed oil prices,” said Simon Oddie, Europa chief executive.

“We have responded by making appropriate cost savings and adjustments in the business whilst maintaining the integrity of our core strategy. Further economies will be made if conditions do not improve in the medium term.”

For the Wressle field, which can double production and therefor boost revenues, the company highlighted recent analysis from the operator, which detailed that with a break-even oil price of US$17.62 per barrel the project is “economically robust”.

Wressle, 30% owned by Europa, is due to produce at an initial rate of around 500 barrels of oil per day.

Quick facts: Europa Oil & Gas (Holdings) PLC

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