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 deal 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.
Zennor said the acquisitions were in line with its growth strategy and formed an “important part of its plans to become a full cycle exploration and production company operating offshore, north-west Europe”.
Managing director and co-founder Martin Rowe added: “We are pleased to have been able to work with the key stakeholders in First Oil, including the management and joint administrators, to execute this transaction.
“These agreements not only add material production volumes and reserves to Zennor, but also enable the company to continue focusing on the commercialisation of discovered resources.”
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.”
He added: “We would like to express our gratitude to management, employees, joint operating partners, regulators and other key stakeholders for their support during this challenging period for the group. These sales are the culmination of many months’ work across that group maximising value for the company’s stakeholders.”
First Oil was founded in 2001 and grew to become the largest privately-owned British company producing oil and gas in the UK part of the North Sea. Suttie made his fortune when he sold oilfield services firm Orwell Group to American giant Weatherford International for £173m.