4th May 2020 10:28
(Alliance News) - Iofina PLC on Monday warned that it is "unlikely" to meet its iodine production goals for the first half of 2020 as a result of brine supply issues at one of its plants.
This is because of the oil price crash and the resultant curtailment of production by oil and gas operators. Brine, which is generally found adjacent to oil and gas fields, is a key raw material for the manufacture of iodine.
Shares in the company were down 29% at 13.48 pence each in London.
For the three months to the end of March, Iofina reported crystalline iodine production of 129.7 metric tonnes. In the first half of 2019, iodine production had totalled 286.7 metric tonnes, so production has more than halved.
Iofina on Monday said that the supply of brine to its No 8 iodine plant located in western Oklahoma in the US is expected to significantly decline in the coming days due to shut-ins of wells or plans to shut-in wells by energy companies due to reduced operating margins at current oil prices.
The company's brine supply partner for No 8 plant is a saltwater disposal operator who sources brine from multiple hydrocarbon producers.
Iofina is exploring options for brine sources for No 8 plant but has not yet found a viable solution.
Brine supply at the company's four other iodine production plants located in northwestern Oklahoma remains unaffected.
The four plants source brine from the Mississippi Lime oil field. The wells feeding these four plants are less susceptible to shut-ins due to higher volumes of oil produced per well, and operators have hedged a significant portion of this established production.
Iofina also said that that challenges relating to the Indian market have reduced and are returning to normal. The company previously reported slowdown in sourcing and sales from India.
President & Chief Executive Officer Tom Becker said: "While the news of a likely significant reduction of brine supply to IO No 8 plant resulting from oil well shut-ins during this time of extreme low oil prices and demand in the USA, is disappointing, we are otherwise pleased with the performance of the rest of the business during the COVID-19 pandemic. Iofina's other four iodine plants are fully operating and the company expects this to continue".
By Tapan Panchal; [email protected]
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