The market capitalisation of Scotland’s oil and gas companies listed on the Alternative Investment Market (Aim) fell by 31.9% to £373.5million as the sector was hit badly by the falling oil price during 2014.
A report by accountants and business advisers BDO – entitled Drilling Down: an Overview of Performance and Prospects of AIM Oil and Gas Companies in 2014 – found that the UK sector market capitalisation fell by 44% in 2014 to £4.9billion.
In Scotland there are four AIM-listed oil and gas companies accounting for 14.8% of the total number but constituting 36.2% of total market capitalisation.
The largest fall in market cap among the Scottish firms was Lansdowne Oil and Gas which saw its value drop 59.7%, while the best performer was Bowleven which fell 22.4%.
Oil and gas firms were the largest fallers among Scotland’s, and the UK’s AIM-listed firms, as the oil price caused a big fall in their value coupled with weakening investor appetite in the second half of 2014. The report also found the average market capitalisation of the top 10 AIM-listed firms was £252million at the end of 2014.
In Scotland none of the AIM-listed oil and gas companies comes close to this, with Faroe Petroleum largest at £165.54million and Lansdowne Oil and Gas the smallest at £13.53million.
Neil McGill of BDO said: “Being a growth market, AIM is inherently volatile and junior-cap E&P stocks are geared to the cyclical nature of the sector. The fall in sector shares is to be expected given the substantial decline in the oil price over the last six months.”
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