SeaEnergy shares slump on funding concerns

Shares in oil and gas services firm SeaEnergy plunged in value today after a warning that it was running out of cash.

SeaEnergy insisted the long-term prospects for its R2S system were 'positive'. Picture: Contributed

The Aberdeen-based firm said the downturn in the oil and gas sector has seen many projects cancelled by customers, and trading conditions have “deteriorated further” since the start of the year, with more contracts pushed back.

“Despite significant cost reductions and the exit from marine and ship management activities, the group is generating losses at current activity levels,” said SeaEnergy, owner of the R2S system, which was acquired in August 2012 and aims to increase operational safety and reduce operators’ costs by reducing the need to visit offshore sites.

It added that a £1 million loan facility secured in November, which was intended to bridge the gap to improved trading conditions, has proved “insufficient and the company’s cash position is becoming constrained”.

Although SeaEnergy, led by chief executive John Aldersey-Williams, said the longer-term prospects for its R2S software and services remain “positive”, any short-term improvement in performance would need a “rapid upturn” in the oil and gas market.

The Aim-quoted firm is now in talks with a number of potential buyers that have expressed an interest in R2S Visual Asset Management, which provides photography and 3D modelling of oil and gas installations, but it warned: “There can be no certainty that such a disposal will be completed and, if not, the group is expected to require additional funding to be able to continue to trade beyond May.”

Following the warning, SeaEnergy’s shares fell as low as 1.5p, having started trading this morning at 3.62p.