Chairman in dire warning on future of Trapoil

NORTH Sea-focused Trapoil has said it is highly likely the company will go bust unless it can raise further funding fast after what it called a disastrous 2014.

Announcing that Trapoil made a £44m loss last year, directors said the company could not survive the plunge in the oil price and problems on the key Athena field unless it could shore up its balance sheet.

“The directors believe that the company currently only has adequate working capital to support its activities until around July 2015,” Trapoil’s chairman Marcus Stanton told investors. He added: “In the event that further funding is not secured in the short term, the board believes that it is highly likely that the company will become insolvent.”

Trapoil’s experience highlights challenges facing small North Sea players.

The firm acquired significant North Sea interests with the £30m purchase of Banchory-based Reach Oil & Gas in 2011. It raised £60m when it listed on the stock market that year, then bought a stake in the Athena oil field for £34.5m.

Trapoil wrote £15m off the value of Athena, its only producing asset, last year. It said Athena became significantly loss-making after the oil price fall and production issues.

It wrote £12.5m off the value of exploration licences.

Noting the 2014 accounts were prepared on a going concern basis, Mr Stanton cited a reasonable prospect the Niobe exploration well planned for the second quarter may be successful and that Trapoil may sell assets.

He said directors are holding conversations to seek additional shareholder support to secure further funding.