The full impact of cost reduction measures and the deferral or cancellation of capital projects in the UKCS is yet to be fully felt, according to professional services firm KPMG.
The next 6 to twelve months will be critical for oilfield services companies of all sizes and those other businesses dependent upon the performance of the oil and gas sector. Businesses that are heavily dependent on UK operations, which are not sufficiently diversified across the life cycle, or which are highly leveraged are likely to be exposed.
Whilst there have been relatively few UK insolvencies in the oil and gas sector since the oil price collapse at the end of 2014, there is increasing talk of distress in the market as the ripple effect of cost reduction spreads through the supply chain. KPMG is encountering increasing instances of companies experiencing stress and distress as a result of the oil price decline.