Troubled North Sea firm IOG owes more than £140 million to creditors as administrators look to restructure the company, new documents have revealed.
A report submitted by administrators FRP to Companies House show IOG has about £4.5m in assets, substantially less than what it owes to creditors.
The firm owes approximately £96m to a group of bondholders overseen via Nordic Trustee AS.
Meanwhile, nearly 30 other firms across the UK and internationally are owed over £47m.
Despite the massive debts, a group of IOG bondholders are aiming to restructure IOG, which holds a 50% share in the Saturn Banks project covering the Blythe, Elgood and Southwark fields in the North Sea.
The other 50% of the licences are owned by CalEnergy Resources, a company owned by investment firm Berkshire Hathaway.
IOG announced in September this year it would go into administration as financial pressure mounted over interest payments it owed on a €100 million (£85m) bond issued in 2019.
Road to administration
IOG had been building up a series of assets in the Southern North Sea, taking smaller fields and developing them as part of the Saturn Banks Hub.
According to administrators, the company’s problems mounted after drilling at the Southwark field proved unsuccessful, resulting in limited gas production due to poor pressure.
In addition, the Blythe H1 well produced formation water resulting in significant onshore disposal costs.
© Image: IOGAlongside steadily declining gas prices over 2023 and an inability to meet its obligations to suppliers, IOG shares plummeted this year as its problems continued.
Following an unsuccessful attempt to sell its subsidiaries in April, IOG finally entered administration in October.
Bondholders still aiming to restructure
According to FRP, IOG bondholders are exploring a potential restructure “whereby they would acquire the subsidiaries and inject new capital”.
However, the administrators said at this stage they “do not consider that this will return the company to solvency”.
If bondholders agree to a restructure, it could be completed by the second quarter of 2024 administrators said.
© van der Kloet Foto & VideoproductiesAny restructure will need to be supported by CAL and will likely rely on the North Sea Transition Authority (NSTA) granting consent to changing control of the operating licences held by IOG.
If a restructure cannot be agreed, administrators will begin a third party sale process.
Several parties have already expressed interested in purchasing IOG and its assets, which include exploration licences in the Grafton/Tenby, Goddard and Kelham fields.
Creditors owed £140 million
According to the administrators, IOG has approximately £4.5m available to preferential creditors, substantially less than the £140m it owes in total.
The amount allows IOG to pay £198,000 towards its employees’ outstanding accrued holiday pay and $421,078 towards outstanding HMRC payments.
What remains will be available for IOG bondholders via Nordic Trustee, however there are “insufficient funds to make a distribution to unsecured creditors”.
That leaves approximately £47m owed to a list of 27 creditors across the UK, Netherlands, Ireland and Luxembourg.
© Subsea 7The list of companies IOG owes money to includes seven firms based in Aberdeen.
IOG owes more than £15.7m to Westhill-based Subsea 7, while more than £8.7m is owed to Petrofac.
Meanwhile, the UK arm of Dubai-headquartered Shelf Drilling is out of pocket by £3.4m.
At the time of administration, IOG had 40 employees of which two have now been made redundant.
In addition the service agreements of three non-executive directors have also been terminated.