Heritage unveils plan to navigate challenging energy climate
Heritage Petroleum Company Limited has opted to store oil production until the global market improves.
This, as the company has taken steps to reinforce its financial position, given the current low global oil price environment.
The announcement of the five-step plan on Monday follows an unprecedented drop in the world’s demand for oil and gas and the accompanying slowdown of economic activity due to the COVID-19 pandemic.
The measures will remain in effect at least until the end of the fiscal year.
Among these measures for navigating the uncertainty of the market, is a capital expenditure reduction of 49 percent and an operating expenditure reduction of 21 percent in the revised Heritage budget which the company said will be constantly reviewed.
The company will identify and implement additional cash-generating options like the sale of obsolete assets including scrap iron and supply boats which it expects will yield significant revenue.
A freeze on recruitment, save for critical jobs has been ordered.
Also discussions and negotiations have been taking place with financial institutions on financing arrangements and loan repayments arising out of legacy Petrotrin debt obligations.
The company is pursuing a strategy of storage of oil production which will be sold as the oil market improves, considering that the oil price is expected to be in the low teens in this quarter.
At present, Heritage’s storage capacity is approximately 3.5 million barrels which will allow the company to store approximately 2.5 months of production as some storage is also needed for settling and treating of the production to attain the correct salable quality.
Heritage said this leaves the company well-positioned to meet its debt commitments and fund its activity for the rest of the fiscal year in what described as an extremely challenging environment.
“The measures that we have implemented will give us the opportunity to continue our mission to deliver value in a safe, profitable manner to our Shareholder and to the people of Trinidad and Tobago,” Heritage concluded.