Sector News

North Sea explorer First Oil Expro has called in administrators from KPMG in the wake of sharp declines for crude prices.

The Aberdeen-based business, part of oil tycoon Ian Suttie’s First Oil Group, was put up for sale at the end of last year and on Friday KPMG’s Richard Beard, Blair Nimmo and Jim Tucker were brought in as joint administrators.

Following their appointment, the administrators agreed to sell a number of the company’s assets – including subsidiaries First Oil & Gas and Antrim Resources, which remain outside administration – to Zennor Petroleum, a Surrey-based oil and gas company.

The conditional sale agreement paves the way for First Oil’s interests in North Sea producing fields Bacchus, Causeway, Cormorant East and Mungo & Monan – along with the undeveloped Glenn and Platypus discoveries – to transfer to Zennor.

Before calling in administrators, First Oil & Gas sold its interest in the huge Kraken oil field to its joint operating partners for a “nominal consideration”. Edinburgh-based Cairn Energy said its subsidiary Nautical Petroleum has bought a 4.5 per cent stake, taking its holding to 29.5 per cent. The remaining 70.5 per cent will be owned by EnQuest after it acquired an additional 10.5 per cent. Both firms said they would not be reimbursing First Oil for the costs it has incurred.

Nimmo, head of restructuring at KPMG in Scotland, said: “We are delighted to announce these two company sales, which are an excellent outcome for stakeholders.

“The fact that their owner, First Oil Expro Limited, sold them via an administration process is a reflection of the significant challenges facing UK North Sea oil and gas companies in the current oil price environment. These sales will ensure that the group’s four largest field interests are smoothly transferred to new ownership, and provide time to resolve the position concerning the smaller assets in the group’s portfolio.”

By Gareth Mackie

Source: The Scotsman