Record number of oil firms collapsing as slump bites

The report warned of further insolvencies among oil and gas companies. Picture: Andrew Milligan/PA Wire

The report warned of further insolvencies among oil and gas companies. Picture: Andrew Milligan/PA Wire

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The number of UK oil and gas companies going insolvent has reached an all-time high following the slump in prices.

A total of 16 businesses became insolvent last year, up from two the year before, and none in 2012, said accountancy firm Moore Stephens.

Conditions will remain tough and insolvencies may continue

Jeremy Willmont

Despite a recent increase, the slump in the price of oil from $120 to just under $50 a barrel for most of the past year has continued to hit businesses, said the report.

READ MORE: Taxpayers ‘could face huge North Sea burden’

Oil and gas sector insolvencies have increased around the world since the fall in prices but smaller North Sea operators faced particular stresses, the research found.

Jeremy Willmont, of Moore Stephens, said: “The collapse of the price of oil has stretched many UK independents to breaking point. The last 15 years has seen a large increase in the number of UK oil and gas independents exploring and producing everywhere from Iraq to the Falkland Islands.

“Unless there is a consistent upward trend in the oil price, conditions will remain tough for many of those and insolvencies may continue.”

The report added that North Sea oil producers faced further “headwinds” from the cost of decommissioning offshore rigs.

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