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Third of listed UK oil and gas drillers face bankruptcy

OWoN: Many of these business now will not be able to afford their bank loans. Banks will recall them. As always.

Disaster for the British economy, Canada is not far behind. Refineries will follow.


Experts warn rigs could be soon shutting down in the North Sea - Image: Alamy


Third of listed UK oil and gas drillers face bankruptcy


Britain's oil and gas industry is running out of cash as low prices and high levels of debt threaten the sector, warns Company Watch

The Telegraph
By Andrew Critchlow
29 December 2014

A third of Britain’s listed oil and gas companies are in danger of running out of working capital and even going bankrupt amid a slump in the value of crude, according to new research.

Financial risk management group Company Watch believes that 70pc of the UK’s publicly listed oil exploration and production companies are now unprofitable, racking up significant losses in the region of £1.8bn.

Such is the extent of the financial pressure now bearing down on highly leveraged drillers in the UK that Company Watch estimates that a third of the 126 quoted oil and gas companies on AIM and the London Stock Exchange are generating no revenues.

The findings are the latest warning to hit the oil and gas industry since a slump in the price of crude accelerated in November when the Organisation of Petroleum Exporting Countries (Opec) decided to keep its output levels unchanged. The decision has caused carnage in oil markets with a barrel of Brent crude falling 45pc since June to around $60 per barrel.

The low cost of crude has added to the financial pressure on many UK listed drillers which are operating in offshore areas such as the North Sea where oil is more expensive to produce and discover.

Ewan Mitchell, head of analytics at Company Watch, said: “Many of the smaller quoted oil and gas companies were set up specifically to take advantage of historically high and rising commodity prices. The recent large falls in the price of oil and gas could leave the weaker companies in difficulties, especially the ones that need to raise funds to keep exploring.”

Losses are expected to much deeper among privately-owned oil and gas explorers, which traditionally have more debt. Company Watch has warned that almost 90pc in the UK are loss making with accounts that show a £12bn accumulated black hole in their finances.

Mr Mitchell said: “Investors in this sector need to focus primarily on the strength and structure of the balance sheet. A critical question is whether the balance sheet is sufficiently robust to keep the company in business until revenues are expected to flow and, crucially are they likely to be able to rely on existing funding lines while they wait?"

"Our fear is sustained low oil and gas prices will put an intolerable financial burden on the weaker companies, jeopardising many livelihoods."

The findings of the Company Watch research are the latest downbeat analysis to hit the industry, which is preparing itself for oil prices to fall below current levels of $60 per barrel. Sir Ian Wood, founder of the oil and gas services giant Wood Group, warned earlier this month that the North Sea oil industry could lose 15,000 jobs in Scotland alone and that production could fall by 10pc as drillers cutback.

According to energy consultancy firm Wood Mackenzie, around £55bn of oil and gas projects in the North Sea and Europe could be shelved should prices fall below their current levels.

Ratings agency Standard & Poor’s recently flagged its concern of some of Europe’s biggest oil and gas groups such as Royal Dutch Shell, BP and BG Group. Its primary worry is debt levels which it says have jumped from a combined $162.9bn (£105bn) for the five largest European companies in the sector at the end of 2008 to an estimated $240bn in 2014.

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4 comments :

  1. Good day John and Cannauzzie,
    Would it be possible to elaborate about what Canada could expect in the coming times. Is the Canadian dollar expected to crash like the American? Is it expected that the Canadian public will suffer to the same extent as the US public when the house of cards crumbles? Is the CAD more stable and viable than the US dollar? etc. etc. Any knowledge, and of course opinions you are able and willing to share for this, and I am other Canadians here is most welcome.
    Also, are there any good web pages for and about Canada that supply honest and reliable information?

    Thank you for what you do; thank you for the selfless and mostly unrecognized service to the whole race of man and Mother earth you and all the White Hats are being and doing.

    PD

    ReplyDelete
  2. Paul,
    If you cling onto the Titanic, what will be the outcome? That Zionist Shill Harper has sold you out to the Cabal,
    Time for Canadians to take back all you have. You are deeply respected by Europe. Why allow that creep to give away your cultural links and future for that degenerate sick bucket of DC and its thieving Zionist Cabal Trolls?

    ReplyDelete
  3. Thank you John. I interpret your comments to mean Canada's road will be, unfortunately, similar to Americas road. What happens there will most likely happen here in Canada also. :-(

    ReplyDelete
  4. Jeeezzzz.....This is a disaster for UK people!!
    Good paying jobs lost because of this insanity running this FINANCIAL TERRORISM OPERATION!!

    ~darylluke.

    ReplyDelete

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