Bow Valley considering all options as debt looms

North Sea company Bow Valley Energy said yesterday that a range of alternatives were being considered for its future.

These could include asset sales, mergers or an outright sale of the business.

The Canadian company, which has operations in the UK North Sea and Alaska, said this move was as a consequence of bank debts maturing on December 31, and the current global economic environment.

Bow Valley’s board has appointed a special committee composed of independent directors, and has engaged Scotia Waterous to examine and consider a range of strategic alternatives.

The firm added: “These alternatives will include, among other things, exploring potential asset divestments, equity alternatives, strategic alliances, joint-venture opportunities, mergers or a corporate sale transaction.

“In addition to the review of strategic alternatives, the company has separately engaged Tristone Capital to assist in the potential disposition of all or part of its Peik North Sea asset, a non-producing pre-sanction property, the proceeds of which will be used first to reduce the company’s outstanding indebtedness and then for working-capital purposes.

“No decision on any particular alternative has been reached at this time and there can be no assurance that the strategic review process or the property sale process will result in any change in the company’s current operations or that the company will pursue any particular transaction.”

Bow Valley said it did not intend to make any further announcement regarding the process until its board had approved a specific transaction or other course of action, or otherwise decided that disclosure of developments was appropriate.

In the UK North Sea, the company has stakes in the Kyle, Enoch, Blane, Chestnut, Ettrick and Peik fields plus exploration interests in four blocks.

Andrew Reid, Aberdeen-based managing director of energy consultant Douglas-Westwood, said: “We are starting to see some smaller oil companies having problems due to the increased cost of borrowing. There is also a problem with the availability of money. It’s unfortunate, but I expect to see a lot more announcements like the Bow Valley one in the months ahead.”

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