Australis Oil & Gas is taking action to preserve cash reserves through a number of cost-reduction measures as it deals with the current low oil price and impacts of COVID-19.
Australis Oil & Gas is taking action to preserve cash reserves through a number of cost-reduction measures as it deals with the current low oil price and impacts of COVID-19.
Perth-based Australis says the impact of the pandemic on global demand for oil, coupled with an increased supply from Saudi Arabia and Russia, has led to a dramatic decline in benchmark oil prices.
In an effort to reduce its debt, the company undertook a strategic review of its loan facility with Macquarie Bank, which was intended to fund initial drill programs within the Tuscaloosa Marine Shale in onshore US.
Australis says the restructure of certain loan terms has enabled an immediate $US10 million ($A16.6 million) reduction in outstanding debt to $US23 million ($A38.2 million).
The restructure also includes the waiver of key covenants for the remainder of the 2020 financial year.
Further, Australis has cut its expected overhead costs by 40 per cent, in addition to a 20 per cent reduction in general and administration expenses announced earlier this year.
Chief executive Ian Lusted and chief financial officer Graham Dowland will forgo 52 and 48 per cent of their base cash salaries, respectively, while chairman Jon Stewart will waive all of his cash fees.
All non-executive directors will forgo 50 per cent of their fees.
Australis said it had also cut salaries across its workforce and reduced its staff headcount through temporary and permanent layoffs.
“These are unprecedented times and we have had to make difficult decisions related to valued members of our team in order to minimise forward cash costs,” Mr Lusted said today.
“The company remains able to meet all obligations and through a constructive dialogue with Macquarie, we have altered the facility in recognition of the current high supply and low demand for oil.
“Management believes that present market conditions will help focus industry on the value of our asset as demand and supply come into equilibrium at a reasonable price point.
“We remain confident that we are well placed to take advantage of that in due course.”
Australis shares were up 7.4 per cent at 3pm AEDT to trade at 2.9 cents.
Several other companies also announced cost-reduction initiatives today, including with Subiaco-based Mali Lithium reducing its board from five members to three.
Chris Evans will resign from his role as managing director and Noel O'Brien as non-executive director, while geologist Alistair Cowden will assume the position of chairman.
Further, Mali said there would be a renewed focus on its gold assets, including on its 90 per cent-owned Massigui project in West Africa.
Mali said there would be no need for a full-time managing director, given Mr Cowden’s previous experience in gold.
Shares in the company were down 20 per cent at 3:30pm AEDT to trade at 4.4 cents.
Brisbane-based Lithium Consolidated also recently announced a board restructure, including with the appointment of geologist Don Smith as its new managing director.
Today, the company said its board and executive remuneration would be reduced by 25 per cent, along with the temporary reduction in all field-based activities.
Peninsula Energy’s board and senior management have also agreed to reduced remuneration, with a 20 per cent cut in fees until at least the end of the current financial year.
Meanwhile, fellow uranium miner Deep Yellow has proposed to reduce director fees as part of a revised work program that will allow the company to operate at a low-spend rate until the end of FY20.
The company reported a strong balance sheet at the end of the March quarter comprising $13 million in cash.
Managing director John Borshoff today said companies that were able to adjust to the situation around COVID-19 while maintaining effective production would benefit most when the pandemic was over.
"Amid this unprecedented environment, Deep Yellow remains confident about the nuclear industry and the important role the sector will play in supplying clean energy in the coming years," he said.
Shares in the company were up 8.7 per cent at 3:40pm AEDT to trade at 25 cents.
