NORTH SEA-focused Ithaca Energy has slashed the valuation of its assets following the plunge in oil and gas prices triggered by the coronavirus.

Announcing its results for the three months to March 31, Ithaca said: “As a result of the historic collapse in oil and gas prices at the end of the quarter, a post-tax impairment of $795 million (£640m) … was recognised.”

The statement highlights the scale of the challenge facing oil and gas firms in the North Sea following the slump in demand for hydrocarbons this year.

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Brent crude fell from around $70 per barrel in January to an 18-year-low of $15.98/bbl in April. It has recovered to around $42/bbl following moves by major exporters to curb production to support the market and the easing of some lockdown measures around the world.

However, Aberdeen-based Ithaca said in April that it could make $450 million cash profit this year even if Brent crude sells for $1 per barrel. The company is benefitting from hedging deals it agreed to sell lots of its output forward at an average price of at least $62/bbl.

Ithaca said yesterday the value of the hedges increased by $306m after tax in the first quarter.

The company said it had taken clear actions to manage the sharp fall in oil prices and proactively preserve liquidity and cash flow resilience in response.

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It plans to cut capital investment in assets by 50 per cent this year, to around $125 million, and to reduce operating costs from $17 per barrel of oil equivalent to around $15/boe.

Led by chief executive Les Thomas, Ithaca bought a $2bn North Sea portfolio from US giant Chevron last year.

Israel’s Delek acquired Ithaca in a £1bn deal in 2017.