Coro Energy (AIM:CORO) says it “continues to believe in its long term prospects”, including the recently proven quality of its Mako asset offshore Indonesia, amid the Covid-19 pandemic.
However, the Company has suspended production at its Sillaro, Bezzecca and Casa Tiberi fields in Italy and believes completion of the disposal is likely to be delayed.
In order to further reduce costs, the Board has also undergone rationalisation and reorganisation with James Parsons, Non-Executive Chairman, now leading the company.
In November 2019, drilling at the Tambak-1 well confirmed the Mako gas field as a “very valuable gas resource” demonstrating its deliverability and ‘excellent reservoir characteristics.’
The Southeast Asian-focused oil and gas firm said today that the successfully drilled Mako gas field is currently undergoing a reserves audit by petroleum consulting company, Gaffney Cline and Associates, expected to be published in late April.
The board says it continues to estimate an upgrade in the Mako field resource size of an additional c.100 billion cubic feet in the 2C category as a result of the 2019 drilling campaign.
Coro Energy was trading 7.69% lower at 0.6p during Thursday morning trading.
In the light of the COVID-19 outbreak in Italy, the company said it has taken the decision to temporarily suspend production on its Sillaro, Bezzecca and Casa Tiberi fields.
The production suspension is expected to save $0.1m and will allow Coro to delay 10-year maintenance activities on Sillaro to conserve a further $0.3m.
As at 31 March 2020, the company is in a strong cash position having reported unaudited cash balances of around $4.5m.
However, Coro said it will act ‘commercially prudent’ now to significantly reduce its cost base due to the unpredictable nature of the market’s current conditions with a $2.3m reduction in costs which will ensure the company has sufficient working capital until April 2021.
“We have moved decisively in the interests of the company and its shareholders to protect our balance sheet in order to ensure Coro can weather the difficult period the industry currently faces,” said James Parsons, Non-Executive Chairman of Coro.
As a result of the challenges faced by the pandemic, Coro has decided to reduce its executive staffing and associated cost base with a list of alternative options to the executive directors.
The board says it has ‘full confidence that this structure will deliver continuity and protect and maintain the value of the company’s asset base during these challenging conditions.’
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