LONDON, Dec. 29 (UPI) -- Companies listed on the London exchange that were set up to exploit higher oil and gas prices are running out of cash, analysis published Monday finds.
Brent, the global price benchmark based on oil blends taken from the North Sea, is trading near the $60 per barrel mark, far below the price for the June contract. Ewan Mitch, lead analyst at British firm Company Watch, said the bear market is putting a strain on the pocketbooks of many regional companies.
"The recent large falls in the price of oil and gas could leave the weaker companies in difficulties, especially the ones that need to raise funds to keep exploring," he said in the report.
The price for Brent is approaching the point at which companies might not be able to generate a profit. British energy company BP said it could cope with an oil price as low as $60 per barrel, though BP Chief Executive Officer Bob Dudley said the company was working on a "simplification plan" to deal with the current climate.
Mitch said about a third of the companies quoted on the London exchange may run out of cash within the year.
"Investors in this sector need to focus primarily on the strength and structure of the balance sheet," he said. "Our fear is sustained low oil and gas prices will put an intolerable financial burden on the weaker companies, jeopardizing many livelihoods."
Oil production from the North Sea has been in decline since the late 1990s. Government data show a decline of 7 percent from last year.
