news6 Jan 2009 09:41
Banks pull plug on Oilexco’s UK operations
By Ed Crooks, Energy Editor
Published: January 5 2009 22:40 | Last updated: January 5 2009 22:40
The UK arm of Oilexco is likely to go into administration within the next day or two, taking all the London and Toronto-listed exploration and production company’s oil and gas reserves with it.
The collapse will be the first significant failure of a UK oil company following the plunge in the price of crude and the drying-up of debt and equity financing since the downfall of Lehman Brothers in September.
Oilexco was the most active driller of appraisal wells in the North Sea in recent years, outdoing big international groups such as BP and Royal Dutch Shell.
Although it has been looming since October, the failure to secure the funding it needed will send shock waves through the North Sea industry.
On New Year’s eve, the company issued a statement warning that its UK subsidiary, Oilexco North Sea Limited, intended to file for administration “as soon as reasonably practicableâ€.
It said Royal Bank of Scotland and its syndicate of banks had told Oilexco that day that they were “not prepared to advance any further funding†to its UK arm.
It added: “Oilexco does not have any other source of funding at this time and has therefore concluded that an administration must be pursu