Oil firms urged to tap into £20bn reservoir

Oil and gas firms in the UK can dive into a £20 billion reservoir by tightening up on their working capital, new research has suggested.

Picture: PA

Accountancy giant PwC said that with no sign of an oil price rebound in sight, exploration and production companies and oilfield services firms were facing a “longer-term trading challenge than anticipated”, resulting in an increasingly pressing need for them to focus on cost efficiency and be “fit at $50” – referring to the current oil price.

Alison Baker, oil and gas leader at PwC, said: “Working capital is the life blood of every company and is a barometer for how freely cash flows. In efficiently run businesses, cash runs freely; in others, cash gets trapped in working capital, restricting the company’s ability to grow.

“Oil and gas firms are facing a future of low oil prices and, as a result, being cost effective in a $50-$60 barrel world will be vital – every move they take to achieve this will be crucial in securing their long term survival.”