UK oil and gas sector insolvencies reach five-year high

Without better prices, further insolvencies are likely as firms exhaust their ability to adapt to the downturn, finds report

The number of UK oil and gas companies becoming insolvent has reached a five-year high, according to a new survey.

A total of 16 UK oil and gas businesses became insolvent in 2016, compared with two a year earlier, according to research by accountancy firm Moore Stephens.

The collapse in oil prices from $120 a barrel to just under $50 a barrel during last year had put many businesses under huge pressure, Moore Stephens said.

The report concluded that without better prices, further insolvencies are likely as firms exhaust their ability to adapt to the downturn.

Jeremy Willmont, head of restructuring and insolvency at Moore Stephens, said: “The last 15 years has seen a large increase in the number of UK oil and gas independents exploring and producing everywhere from Iraq to the Falkland Islands.

“Unless there is a consistent upward trend in the oil price, conditions will remain tough for many of those and insolvencies may continue,” he added.

The report added that North Sea oil producers faced further “headwinds” from the cost of decommissioning offshore rigs.