Northern Petroleum today said it was pulling every available cost lever, including staff reductions, salary cuts and a relocation of its head office, to weather sub-$50 oil.
The firm released its annual results today. Its turnover fell from £2.7million to $332,000.
It slashed nearly £4million in administrative costs in the past year, including moving its base to cheaper south London location and pulling contractor work.
Chief executive Keith Bush said: “In 2015 the Group focused on reorganising the business to reflect the current industry environment and to position for future growth. The farm out of our onshore Italian licence was a considerable achievement, demonstrating the potential of our Italian portfolio. The Canadian production and reserves acquisition announced in December is now delivering increased production and cash flow, validating the rationale behind the deal. With further low cost activities identified on these assets we will look to continue this upward trend in production throughout the rest of 2016.”
Chairman Jon Murphy added: “In conjunction with a reduced overhead the Group successfully raised a total of £1.6million through a combination of a subscription by the Group’s two key shareholders, raising £1. million, coupled with an open offer to all shareholders raising a further £0.4million. This is a great achievement at a time of low commodity prices. I would like to express my thanks to our institutional shareholders and those shareholders who participated in the open offer. This vote of confidence in the Group’s future is appreciated.
“The new capital allowed us to finalise the terms of the acquisition of reserves and production in the Rainbow area of north west Alberta and fund a modest work programme for 2016 to deliver growth in Canadian production.
“2015 has been a difficult year and we foresee similar challenges through 2016. The combination of reduced overhead, the injection of new capital investing in cash generating production and a focus on operating costs have enhanced the Group’s position to trade through the downturn and create future shareholder value. Management are also focused on attracting new capital into the business through the farm out of existing assets and the raising of debt or equity, which may be required to secure the future of the business.
“Given the difficulties we have faced through the year I want to add a note of personal thanks to our staff. The implementation of cost control initiatives, staff reduction and office relocation were done with the highest degree of professionalism.”
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