AN American oil and gas firm has filed for bankruptcy protection citing cost overruns on North Sea projects, but said it expects to achieve good returns in the area.
Endeavour International Corporation said the company and some subsidiaries filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States in connection with a debt restructuring support agreement.
The company said it took the action after hitting costly complications with efforts to develop the Bacchus and Rochelle fields off eastern Scotland.
Endeavour said both developments were over a year delayed in starting production, causing cost overruns from the original projections. It added: "These delays also substantially impacted the cash flow and operating margins the company would have received had the projects come online as scheduled. To maintain its ownership rights in these valuable assets, Endeavour incurred additional debt at a high cost of capital."
However, Endeavour's chief executive, William Tansier, said it had been a significant accomplishment by the company to get its North Sea developments online. He added: "We continue to believe that these are quality long-lived assets that can generate substantial returns."
Endeavour's comments highlight the challenges firms can face developing North Sea assets. Last week experts at Deloitte noted that while the costs of operating off Scotland have remained high the price of crude has fallen sharply in recent months amid plentiful supplies.
Endeavour said it expects its oil and gas operations to continue in the ordinary course throughout the Chapter 11 Proceedings. The company said its U.K. subsidiaries and certain other affiliates have not sought bankruptcy protection and will continue to operate outside any reorganisation proceedings.
Following the restructuring, involving a debt for equity swap, the company's existing debt will be reduced by around $568 million (£355m) and its annual interest burden by 43 per cent.
With headquarters in Texas, Endeavour's interests include a 44 per cent stake in Nexen-operated Rochelle, a 30 per cent holding in Bacchus, operated by Apache, and US shale assets.
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