Firms seek to buy credit crunch casualty, Oilexco

Several companies have placed offers for the whole of Oilexco North Sea, which went into administration earlier this year because it could not secure a loan for its development and drilling program.

Uchenna Izundu
OGJ International Editor

LONDON, Feb. 5 -- Several companies have placed offers for the whole of Oilexco North Sea Ltd., which went into administration earlier this year because it could not secure a loan for its development and drilling program (OGJ Online, Jan. 4, 2009).

The company's administrators, Ernst & Young, said it would start due diligence and negotiations with a few potential buyers and hope to conclude these by mid-March.

Companies rumored to be interested in Oilexco are Nexen Petroleum USA Inc., Petro-Canada, Talisman Energy Inc., and Apache Corp.

The sale of Oilexco, the first casualty of the credit crunch in the UK, will provide an indication of the value of North Sea assets as the recession causes a drop in drilling activity and staff redundancies in service companies and operators that are struggling to cope with plummeting prices and the squeezing of finance. The closing date of bids for Oilexco was Jan. 30.

Oilexco operates Brenda and Nicol fields, among others, in the UK North Sea. They produce 16,000 b/d. Shelley field is being drilled and is expected to produce more than 30,000 b/d.

It recently lost operatorship of the Huntingdon oil prospect to E.On Ruhrgas UK Exploration & Production Ltd. after its partners unanimously voted for the transfer (OGJ Online, Jan. 12, 2009). Huntington is potentially one of the largest discoveries in the last 5 years; it was put on a fast track to come on stream early in 2010. It is estimated to have up to 150 million bbl of oil in place.

Contact Uchenna Izundu at uchennai@pennwell.com.

More in General Interest