A new management team is set to take charge of loss-making Trapoil in the belief the company can still prosper in the North Sea in spite of the crude price plunge.
Oil and gas veterans Andrew Benitz and Ronald Landsell plan to change London-based Trapoil’s strategy to focus mainly on buying into existing producing assets rather than trying to find and develop new fields.
“There is still an opportunity to make money at current prices,” said Mr Benitz. “Where you can’t make money is in the exploration and development stage.”
Mr Benitz said the fall in the crude price has created opportunities to buy assets at attractive prices.
He noted Trapoil has amassed losses the company could use to boost returns from producing North Sea fields.
The losses were incurred while Trapoil worked on an exploration portfolio that included assets acquired through the £30m acquisition of Banchory-based Reach Oil & Gas in 2011.
Trapoil acquired a 15 per cent stake in the Athena oil field before it entered production in May 2012, for around £35m. Athena became significantly loss-making following the fall in the crude price and production issues.
In May Trapoil warned it could go bust unless it raised further funding fast.
Mr Benitz noted the company had reached an agreement with creditors in June.
He and Mr Landsell have agreed a deal under which they will sell the Jersey Oil and Gas E&P business they founded to Trapoil for shares in the Aim-listed company worth around £500,000.
Trapoil has arranged to raise around £800,000 working capital from new and existing investors.
The deals will leave shareholders in Jersey Oil & Gas with around 27 per cent of the shares in the enlarged Trapoil, which raised £60m when it floated on Aim in 2011.
They are subject to approval by shareholders in Trapoil, which will be renamed Jersey Oil and Gas.
Mr Benitz and Mr Landsell will be chief executive and chief operating officer of the enlarged firm.
Trapoil’s chairman Marcus Stanton said: “We believe that the proposed acquisition of JOG, refined business strategy and injection of new capital, presents a welcome opportunity to enable the Company to resume a growth strategy.”
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