19th Feb 2015 09:20
LONDON (Alliance News) - Jupiter Energy Ltd Thursday said it will cease all of its production at the beginning of March in response to lower oil prices, and said it will restructure the company to reduce costs until it recommences production.
Jupiter's only asset, Block 9 on the Mangistau Basin in south west Kazakhstan, will cease production on March 1, after the company said oil production has become "uneconomic" following the decline of the oil price since the middle of 2014.
"The company has decided to cease production from both of its producing Akkar East wells, J-51 and J-52, until the domestic oil price improves," it said.
Jupiter will continue to ensure it meets its obligations in terms of the testing of the various wells under the terms of their respective trial production licences, it said in a statement.
Jupiter said forecasts show that the Brent oil price "may reach an acceptable level during the 4th quarter of 2015," but warned there is no guarantee.
Following the shut in, Jupiter said it is restructuring, reducing staff numbers and amending contracts with several suppliers, The company said it will reduce its running costs by 40%, or by USD2 million per year following the restructuring.
"In addition, the directors of the company have already agreed to defer their Directors' Fees until such time that the company has an improved cashflow," said Jupiter.
The company said it continues to look to raise further capital, and is hoping to have this finalised during the first quarter of 2015, it said.
Jupiter shares were down 4.0% to 18.00 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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