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Be the first with the news that moves the market- ShaMaran Petroleum Corp (TSXV:SNM) has slashed its planned 2020 expenditures but remains financially stretched at the current depressed oil price
- The company has cut its operating budget by 80 per cent, to approximately C$39.15 million
- ShaMaran has also cut its operating budget and its G&A costs by 22 and 28 per cent respectively
- The company stated that an ongoing payment deferral agreement with the Kurdistan Regional Governments, coupled with the low oil price, is causing significant liquidity constraints
- ShaMaran Petroleum Corp (SNM) remains unmoved, with shares trading for $0.035 and a market cap of $75.6 million
ShaMaran Petroleum Corp (TSXV:SNM) has slashed its planned 2020 expenditures but remains financially stretched at the current depressed oil price.
The company, along with its co-venture companies, has cut its operating budget by 80 per cent, to approximately C$39.15 million. ShaMaran has also reduced its operating budget and its G&A costs by 22 and 28 per cent respectively.
ShaMaran has approximately $11.88 million in available cash and monthly expenses amounting to around $3.77 million. A payment deferral agreement with the Kurdistan Regional Government is likely to stretch the company cash reserves even further.
Thus far, $58.72 million is being withheld from ShaMaran through the deferral program. The company stated that if monthly delivery payments continue to be held off, it will be facing significant cash constraints in the near-term.
Dr. Adel Chaouch, President and CEO of ShaMara, said even with the heavily reduced budget the company remains financially strained.
“We have drastically reduced expenditures for 2020, and have agreed with our Atrush co-venturers a revised budget that is now fit for the times we are living in.
“However, despite these measures, ShaMaran still faces significant liquidity constraints which have to be addressed. As such, we are exploring all options that will be in the best interest of stakeholders and the company,” he said.
The oil price crashed earlier this year, when a trade-war broke out between OPEC+ countries and Russia. Despite oil production being re-capped earlier this month, the already flooded oil market has subsequently been hit with reduced demand, due to the ongoing COVID-19 pandemic.
As a result, the oil price continues to be heavily depressed, forcing the oil and gas industry to radically rethink any previous 2020 forecasts.
ShaMaran Petroleum Corp (SNM) remains unmoved, with shares trading for $0.035 at 9:32am EST.
