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‘Business as usual’ as buyer for North Sea firm is sought

‘Business as usual’ as buyer for North Sea firm is sought
Ernst and Young was appointed yesterday as administrator for oil and gas company Oilexco North Sea (ONS).

Ernst and Young was appointed yesterday as administrator for oil and gas company Oilexco North Sea (ONS).

The news leaves a questionmark over the future of about 100 staff in Aberdeen and offshore, however, E&Y said it intended to continue with existing operations, with a view to finding a buyer for the business.

A spokeswoman added: “It’s business as usual. We are not expecting redundancies at this stage.”

Colin Dempster, one of the joint administrators, has already been approached by several interested parties with a view to purchasing the whole or part of the company’s business and assets.

Rivals BG Group, Talisman Energy, Petro-Canada and Maersk Oil have all been linked in the media with possible bids.

Canadian parent Oilexco – which is not subject to the administration – had announced on Hogmanay that its subsidiary intended to file petitions for administration “as soon as reasonably practicable”.

The group said it had run out of options for ONS after bankers refused to provide further funding.

E&Y said the company was an important operator of several fields in the North Sea, including Brenda and Nicol.

It added: “The company began experiencing difficulties in mid-2008 in raising finance to continue its planned drilling and development programme and in recent months a strategic review was undertaken, leading to buyers being sought for the business.

“The company currently produces around 16,000 barrels of oil per day and is on the verge of producing oil from the Shelley field which, along with other current drilling activity, is expected to result in total production of over 30,000 barrels per day.”

The problems at ONS follow warnings from industry experts that some smaller firms operating in the North Sea could become casualties of the global recession as funding dries up.

In November, Aberdeen-based E&Y oil and gas partner Alec Carstairs said the situation for many companies was nearing critical.

The downfall of some firms is widely expected to create acquisition opportunities for bigger players in the North Sea, offering hope for the ONS staff now facing an uncertain future.

ONS activities are focused on the outer Moray Firth and central Graben areas of the central North Sea. Production assets also include the Janice/James and Balmoral/Stirling/Glamis fields, Nelson field and platform, and Balmoral floating production vessel. Discoveries include Black Horse, Bugle, Huntington, Kildare, Ptarmigan, Shelley and Sheryl.

ONS also has exploration acreage interests in Alpha/Delta, Bluebell, Caledonia, Catcher, Constance, Danica, Halibut North, Laurel Valley, Mallory, Manhattan, Moth, Oddjob, Sparrow and West Athena.

Oilexco shares closed last night at 8.88p, down 32% on the day and a far cry from the 52-week high of 964p.

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