North Sea exploration minnow Trap Oil has warned that, without urgent additional funding, it is likely to become insolvent.
The firm, which has reduced its overheads from £5.1 million 2 years ago to £1.3 million/yr posted a pre-loss of £44.4 million, up from £10.3 million the year before. The firm has also relinquished licenses deemed uneconomic and gained new licenses in the North Sea.
Trap Oil was set up in 2007 and has carried and paying interests in a number of North Sea licenses, including the producing Athena oil field.
It has an ongoing exploration campaign and has paid £3 million towards the drilling of the Suncor operated Niobe well on Blocks 12/26b in June this year.
It is also assessing potential of the Magnolia find in Block 12/23a, which it says may contain an extension of the Liberator discovery well, and also recently gained a new exploration license under the 28th Seaward Licensing round, P2170, Block 20/5b, containing the Cortina prospect.
But, its relinquishment of licenses has resulted in impairment charges of about £12.5 million, losses on the Athena field, amounting to £15.1 million, and a US$3 million payment due to a renegotiation of the FPSO contract on the Athena field, which is operated by UK-based independent explorer Ithaca Energy.
Trap Oil says: "Although we look forward to the drilling of Niobe and despite the overhead reductions achieved, in the absence of additional funding the group has insufficient resources to continue operating beyond the short term.
"The Board, in conjunction with its advisers, is urgently assessing a number of potential funding alternatives and/or asset sales.
"In the absence of a viable funding solution, the Board considers that it is highly likely that the Company will become insolvent, and appropriate insolvency proceedings, such as administration or liquidation, will consequently need to be commenced."
Subscribe
