- Highwood Oil Company (TSXV:HOCL) has closed off any oil production that has become unviable, given the recent oil crash
- This brought production at its Alberta operations down to just 250 barrels of oil a day, which the company will not alter until prices improve
- Highwood is also immediately ceasing all non-discretionary spending and cancelling its remaining 2020 drill program
- In a further effort to retain liquidity, the company is reducing general and administrative expenses, including reducing staff salaries
- Highwood Oil Company (HOCL) is holding steady, with shares trading for C$20.00 and a market cap of 118.9 million
Highwood Oil Company (TSXV:HOCL) is implementing cost-cutting measures to mitigate the impact of historically low oil prices on its operations.
After evaluating its oil properties in Alberta, the company shut in any production that has become unviable in the current market.
This has brought production down to just 250 barrels of oil per day. Highwood does not plan to alter this production level until prices improve.
In a further effort to retain liquidity, the company is reducing general and administrative expenses, including reducing staff salaries.
Highwood is also applying for the government’s COVID-19 wage subsidy program, to help mitigate the impact to its employees.
Furthermore, the company is immediately ceasing all non-discretionary spending. Before the current market turmoil, Highwood had successfully drilled five wells at its Clearwater property. However, it has now cancelled the remaining 13 planned wells until further notice.
The oil price crashed to historic lows earlier this year, after negotiations between OPEC and Russia broke down. This resulted in a number of countries uncapping oil production, which flooded the market and drove the price down.
The oversupplied market was further hindered by the ongoing COVID-19 pandemic. The global health crisis has lowered demand for oil, especially in the airline industry.
Over the weekend, Saudi Arabia and Russia finally agreed to slash production by around 10 million barrels a day. This effectively recapped production.
However, common oil benchmarks, The West Texas Intermediate and the Brent Crude, have only marginally improved.
This is most likely due to stockpiled oil already let into the market, and concerns about COVID-19’s effect on demand.
Highwood Oil Company (HOCL) is holding steady, with shares trading for C$20.00 at 2:45pm EST.
