Company a victim of sector woes
Aberdeen firm Trap close to insolvency after oil price slump
The North Sea focused company’s loss rocketed from £10.3 million to £44.4m in what it described as a “disastrous” year.
It said it does not have enough cash to continue beyond the short term and the board has called in advisers to assess its options which could include asset sales.
“In the absence of additional funding the group has insufficient resources to continue operating beyond the short term,” it said in a statement, indicating that the deadline for raising funds is July.
“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.”
A board shake up last year saw Simon Bragg replaced as chairman by Marcus Stanton to oversee the group’s restructuring. Mark Groves Gidney, chief executive, and Paul Collins, chief operating officer, resigned.
Overheads were cut from £3.5m in 2014 to a currently anticipated £1.3m for 2015. A number of exploration licence interests were relinquished which, together with losses on the Athena field due to bad weather, has resulted in £27.6m of impairment charges.
The company has laid off staff and relocated from its offices in King Street. But it admitted today that it had just £7m in the bank at the end of last year.
“We ended 2014 in a very poor financial position having endured what can only be described as a disastrous year for the company and its shareholders.
“As at 31 December 2014 we had just over £7m of cash in the bank having sold our entire holding of IGas Energy plc shares during the year.
“The group, however, has a significant drain on its remaining cash reserves as Athena is currently expected to incur further operating losses in 2015, which without an injection of new capital the group will have insufficient cash to cover, along with extra abandonment liabilities of £4.2m, as well as the group’s annual running costs of approximately £1.3m.
“The directors consider that the group remains under capitalised due to the recent collapse in the Brent oil price and the significant losses that are being incurred in respect of our Athena asset.
“Having significantly reduced the company’s cost base and relinquished assets where it was believed there was little ability to generate value for shareholders, we remain hopeful that our remaining assets might offer near term upside. The work commitments of the group remain minimal, with only one well at Niobe remaining, being an obligation to DECC, and we have pre-funded our share of approximately £3m for the estimated dry hole costs of this well.”