E&Y becomes administrators of Oilexco North Sea

The UK High Court has named Ernst & Young LLP as administrators of Oilexco North Sea Ltd.

Jan. 12, 2009

2 min read

Uchenna Izundu
International Editor

LONDON, Jan. 12 -- The UK High Court has named Ernst & Young LLP as administrators of Oilexco North Sea Ltd.

The company is seeking buyers for the business and its assets because banks refused to grant loans to carry out its drilling and development program (OGJ Online, Jan. 4, 2009). Oilexco has fields in the UK North Sea with proven oil reserves, which produce 16,000 b/d. Some of its key operations are the Brenda and Nicol fields. The Shelley field is being drilled and is expected to produce more than 30,000 b/d.

E&Y said it received enquiries from several interested parties that wished to buy the whole or part of the company's business and assets. In the interim, it plans to continue with existing operations.

RBC Capital Markets said the company's administration process would probably mean reduced rig commitments and cash for shareholders, assuming a price of $50/bbl and bids for its assets. It warned that potential buyers could snap up the assets cheaply as sources of capital have dried up and potential bidders are hoarding cash.

"Any sale proceeds would go first to the banks that have lent some $700 million to the company. The administrator would then look to settle the company's outstanding unsecured liabilities, some $200 million," RBC Capital Markets added.

Oilexco Inc., Calgary, the parent company, will be delisted from the Toronto Stock Exchange at the close of market on Feb. 9, "for failure to meet the continued listing requirements."

Contact Uchenna Izundu at [email protected].