First Oil and Gas (FOG) suffered losses of more than £30million in its last full trading year before its buyout by Zennor Petroleum.
Aberdeen-based FOG and Antrim Resources – previously owned by north-east entrepreneur Ian Suttie – were acquired by Zennor for an undisclosed sum after their parent, First Oil Expro (FOE), was put into administration in February.
FOG and Antrim were not themselves in administration – their sale followed a strategic review of FOE operations launched last year.
Accounts just released by Companies House show FOG – now Zennor CNS – made pre-tax losses of £30.15million during the 12 months to April 30, 2015, compared with profits of £52.13million a year earlier.
Turnover for the latest period came in at £40.4million, down from just over £78million previously as the oil and gas downturn tore a hole out of the company’s finances.
In his review of 2014/15, FOF finance director James Henry, who is now in the same role with Surrey-based Zennor, said: “The company was badly affected by a significant fall in the global market price for oil.
“This was the main reason for a large decrease in the company’s turnover.
“Cost of sales rose over the same period, which resulted in an overall year-on-year decrease in gross profit of 77% (to £11.8million).”
Mr Henry said losses were the result of an impairment charge of £41.1million, representing a write-off on the value of producing assets after oil prices plummeted.
On February 18, two days before FOE went into administration, FOG sold its entire 15% stake in Kraken – one of the largest current developments in the UK North Sea – for a nominal £1 to field partners EnQuest and Cairn Energy.
Zennor’s deal for FOG and Antrim completed in March, giving the group stakes in North Sea producing fields Mungo, Monan, Bacchus, Cormorant East and Causeway.
A separate asset purchase agreement covered the acquisition of FOE’s remaining interest in Cormorant East and stakes in two undeveloped discoveries, Glenn and Platypus.
Zennor – previously MPX – is backed by Hong Kong-based Kerogen Capital, which pumped £70million into the business last year.