Trapoil is set for a mass management clear-out as it aims to cut costs amid a tough North Sea market.
The chief executive, chairman and chief operating officer are leading an exit from the company that has also quashed a loan facility and axed a farm-in option with French supermajor Total.
Trapoil said on Tuesday that its board has "spent considerable time" looking at "a number of options" to optimise its business, and has decided that the way forward is to reduce costs.
"This is expected to result in a number of senior personnel leaving the business," it said.
"It is anticipated that this will result in general and administrative expenses being reduced by approximately a further £1million ($1.68 million) on an annualised basis."
Chief executive Mark Groves Gidney and chief operating officer Paul Collins, both co-founders, have "agreed to step down from the board on completion of an orderly transition period, expected to take approximately two months," Trapoil said.
Chairman Simon Bragg has resigned with immediate effect, with non-executive director Marcus Stanton to take on a non-executive chairman role "to oversee the transition process".
More losses could be on the way, as the company continued: "The board will continue to review the composition of the board in light of the cost reduction strategy stated above."
As part of the rationalisation, Trapoil has decided to let its farm-in option at the Scarinish well, also known as Alfa, on licence P1916 in the UK North Sea go. The explorer had an option to grab up to 35% of the licence.
It is also somewhat unclear, however, what Trapoil intends to do with its stake in the Romeo discovery, where it has a 12.5% carried interest.
It had looked set to assume operatorship at the Romeo discovery in Block 30/11c in licence P1666, following a recent asset swap deal with Canada's Suncor. The Alfa prospect, operated by Total, sits in an adjacent block.
However, Tuesday's announcement left the door open to a possible exit from Romeo, as Trapoil said: "The company will ... continue to evaluate ways of maximising the value of its interest in the ... Romeo asset."
Trapoil has also axed its three-year facility entered into in January with GE Energy Financial Services. "This is expected to save approximately $880,000 on an annualised basis, with a one-off cost of approximately $300,000 paid in 2014," it said.
Shares in Trapoil dropped more than 10% in London on Tuesday morning, before recovering to around 6% down by 8:30am.
Commenting on the developments, Groves Gidney said: "It is sad for myself and Paul Collins to be leaving the company which we both started seven years ago.
"However, it has been a struggle for small cap explorers in the North Sea and in the circumstances we both feel that the proposed strategy is in the best interest of shareholders."
In early June, Trapoil entered into an agreement with US-based Prostar Capitalto help the private equity firm scout for North Sea projects.
The agreement will give Trapoil the option to acquire up to a 5% interest in any acquisition made with Prostar’s cash. It will also receive a 2.5% carried interest on any acquisition as well as a 2.5% cash payment if the assets are sold in future.
Around the same time, Trapoil negotiated new agreements with Suncor whereby it will take over the latter’s operating stake of 50.625% stake in Romeo to give it a controlling 73.125% interest in the find, with remaining partners First Oil & Gas and Total on 15% and 11.875%, respectively.
In return, Suncor will cancel its 5.5% share of Trapoil’s existing carried interest in the Niobe prospect in licence P1889, which is operated by the Canadian company with a 49.5% stake.
Trapoil would be left with a 28% equity interest in the latter prospect, of which 2.5% will continue to be carried by partner Noreco that holds 22.5%, subject to confirmation of the deal by the licence partners and UK authorities.
The discovery well at Romeo, drilled in 2012, struck about 200 feet of gross oil pay at three different stratigraphic levels in Jurassic and Triassic formations, and Trapoil now aims to carry out further drilling to tap “significant potential” at the find.