The number of insolvencies of UK oil and gas services companies has trebled in the last year amid the huge fall in oil prices, according to a new report.
Accountancy firm Moore Stephens said 18 businesses have become insolvent this year, compared to just six in 2013 which it described as “significant” as insolvencies in the sector have been rare over the last five years.
The number of insolvencies this year represents more than three times the average number of insolvencies in the sector in the previous four years, said the report.
The drop in oil prices is triggering cost cutting across much of the sector and the reduction in capital investment means less work for oil and gas services companies, according to Moore Stephens.
Jeremy Willmont, head of restructuring & insolvency at Moore Stephens, said: “The fall in the oil price has translated into insolvencies in the oil and gas services sector remarkably quickly.
“The oil and gas services sector has enjoyed very strong trading conditions for the last 15 years, so perhaps they have not been quite so well prepared for a sustained deterioration in trading conditions as other sectors would have been.”
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