- Energy technology company, Questerre Energy (TSX:QEC) is taking drastic measures to weather the pandemic and recent oil price crash
- After already slashing its budget by 80 per cent, earlier in the year, the company has cut its employee salaries by up to 50 per cent
- The company has also cut its board fees by 20 per cent and reduced to a four-day workweek
- The company has drawn under 50 per cent of its $20 million credit facility and expects this to be sufficient liquidity in the near-term
- Questerre Energy (QEC) is down 8 per cent, with shares trading for C$0.12 and a market cap of $49.2 million
Energy technology company, Questerre Energy (TSX:QEC) is taking drastic measures to weather the pandemic and recent oil price crash.
Oil prices reached historic lows earlier in the year, when negotiations broke down between OPEC+ countries and Russia. As a result, a number of countries uncapped production, flooding the oil market and driving benchmark prices down rapidly.
Despite production being recapped last month, the ongoing COVID-19 pandemic has reduced oil demand and exacerbated the oversupplied market.
In a lengthy address to shareholders, Michael Binnion, President and CEO of Questerre, outlined the company’s strategic moves to combat the unprecedented industry challenges.
“As noted in our annual report, we are focused on preserving liquidity. We entered this year with relatively low debt levels and have a lot of discretion on our capital spending.
“We deferred all non-essential investment, cutting our budget by over 80 per cent or C$15 million. ” he said.
By the end of its first quarter, the company expects to have drawn less than 50 per cent of its $20 million credit facility. As operations oil and gas operations remain suspended in the near-term, the company planned expenditures have reduced even further.
Consequently, the company believes its cash reserves to be sufficient for now.
Questerre is also seeking aid from the Federal Government’s newly announced emergency financing initiatives.
A significant overhead reduction plan is also being implemented throughout Questerre’s operations. The company has instigated a four-day week and has cut salaries by up to 50 per cent. Board fees have also been cut by 20 per cent.
Regarding production, with the oil price historically low and global oil storage reaching capacity, the company is considering its options. While Questerre may reduce or completely shut-in its oil and gas production, no firm plans have yet been announced.
Questerre Energy (QEC) is down 8 per cent, with shares trading for $0.12 at 11:00am EDT.