SeaEnergy warns of ‘significant’ loss on low oil price

John Aldersey-Williams, chief executive of SeaEnergy
John Aldersey-Williams, chief executive of SeaEnergy
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Offshore services group SeaEnergy today warned it faces “significant” losses due to sustained low oil prices.

The alert came as the Aberdeenshire-based firm said it has agreed a working capital funding package, under which it can draw up to £1 million over the next 12 months.

SeaEnergy has signed loan agreements with Aberdeen company Davies Newman Property – which has interests in property and oil and gas – and US hedge fund LC Capital Master Fund, which has a 7 per cent stake in the business and is controlled by SeaEnergy non-executive Steven Lampe.

The Aim-quoted group, led by chief executive John Aldersey-Williams, is behind the R2S system, which aims to increase operational safety and lower costs by reducing the need to visit offshore sites. In September, the company warned it would not meet its full-year expectations and said it expects to make an operating loss in 2015 before returning to profitability in 2016.

Today the firm told investors: “During 2015, sustained low oil prices have very severely impacted levels of business in the core R2S offering as well as in other parts of the group. Revenue from continuing business for the year ending 31 December 2015 is now expected to be between £2.6m and £2.8m, resulting in a significant loss.

“While software licence income has held up well and forensic activities are ahead of forecast, the weakness in the oil price and consequent reduction in oil company operating budgets have severely impacted new capture and recapture activities and levels of digital media work.”

Westhill-based SeaEnergy said it had reviewed a number of options – including an equity fundraising – to address a shortfall in working capital resulting from reduced R2S business levels, but opted for a short term debt-based approach “in order to minimise long-term dilution to shareholders”.

It added: “The directors believe that, in light of the currently anticipated upturn in R2S business and other work in 2016, together with significant cost reductions in central costs (including an extension through 2016 of the voluntary salary waivers by the directors which began in June 2015), the facilities, in addition to the existing HSBC overdraft facility, should be sufficient for the group’s working capital requirements for the foreseeable future.”

SeaEnergy was born out of Ramco, the oil and gas firm founded by energy entrepreneur Steve Remp more than 35 years ago.