19th Jun 2020 10:17
(Alliance News) - Gulf Keystone Petroleum Ltd on Friday said it is in the process of cutting 40% of its workforce amid a reduction in the work programme due to the oil price crash and the Covid-19 pandemic.
Oil prices crashed from USD66 a barrel at the start of 2020 due to a price war between oil producing countries and a sharp slump in demand due to the Covid-19 pandemic. Brent oil was trading at USD42.40 a barrel early Friday, up versus USD41.20 late Thursday.
The Iraq-focused oil explorer also said it now expects operating expenses of USD2.7 to USD3.1 per barrel for 2020, down from USD3.9 per barrel in 2019, due to an ongoing cost-cutting programme.
Shares in Gulf Keystone were down 0.4% at 94.71 pence each in London on Friday morning.
"As a result of a continued rationalisation of the organisation, expenditures, and contract renegotiations, the company remains on track to achieve its previously announced target of operating expenses and general & administrative savings in excess of 20% in 2020 compared to 2019. On a run-rate basis, we are targeting to achieve savings of 30%," Bermuda-based Gulf Keystone said.
Capital expenditure for 2020 is expected to be in the range of USD40 million to USD48 million, a 50% reduction compared to 2019, of which USD30 million had been spent by the end of April. Cash balances amounted to USD144 million as of Wednesday.
Chief Executive Officer Jon Ferrier said: "In response to the unprecedented Covid-19 pandemic and macroeconomic conditions, we took decisive actions to preserve liquidity and safeguard the long-term health of the business. We are now well placed to weather the current environment and are able to move quickly back to growth at the right time.
"Whilst uncertainty around the timing of the end of the crisis persists, the partial oil price recovery gives us some grounds for optimism about the future and our return to delivering the significant untapped value in Shaikan."
By Tapan Panchal; [email protected]
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