Administrators have been appointed to Thornaby-based marine trenching business Reef Subsea UK Limited after it became the latest casualty of the global oil price crisis.
Around 43 of the firm’s 70-strong workforce at its Thornaby head office and Port of Blyth launch base have been made redundant, though there are still hopes of keeping the business as a going concern.
The move comes just over a month after the Teesside operation insisted it was not in administration as news of its Norwegian parent’s demise unfolded.
Accounts for Reef Subsea UK, a separate legal entity to Norwegian-based Reef Subsea AS, show the company made a post-tax loss of £15.9m in 2013.
Administrators Dan Butters and Adrian Berry of Deloitte were appointed to Reef Subsea UK on March 3 and continue to trade the business to preserve its main contract whilst assessing options.
The pair confirmed the options included progressing interest from potential buyers.
Mr Butters said: “Following the bankruptcy of the wider group, the directors have sought to secure the survival of the business.
“These efforts are ongoing whilst the administrators trade the business but unfortunately we have had to make a number of redundancies today in order to reduce ongoing costs. Our specialist team is supporting those employees affected.”
Last year Reef Subsea AS restructured to form three independent business — X-Subsea, Reef Power & Umbilical and Technocean Subsea.
Reef’s chairman Mel Fitzgerald was reported in the Norwegian press as saying recent market deterioration caused by low oil prices had scuppered the turnaround efforts.
Speaking to the Norwegian newspaper Dagens Næringsliv Mr Fitzgerald, said: “We have worked intensively in recent years to restructure the company and reduce costs and competition.
“The recent deterioration in the market has made that we have not succeeded. We have tried to find solutions together with the central shareholders, but unfortunately we have not managed to get agreement that restructures the company.”
In its 2013 accounts Reef Subsea UK said it was looking forward to becoming a “major player and market force” in 2016 and 2017, despite post-tax losses of £15.9m.
Late last year the Teesside firm announced it had completed work on the Gwynt y Môr Offshore Wind Farm – its largest contract to date.
In its 2013 accounts, Reef Subsea UK said the contract had been made difficult initially by poor conditions, a feature which had contributed to the significant losses.
Commenting on news of Reef Subsea AS’ bankruptcy, Neil Gordon, chief executive of industry body Subsea UK, said: “This hugely disappointing news will regrettably not be the only casualty in the oil and gas industry in the coming months when we expect to see more job losses and companies battling to survive.
“Those companies which are highly leveraged, which have capital intensive strategies, high-cost vessels and will be most affected if projects continue to be postponed or cancelled and they are unable to quickly re-shape and reposition themselves to adapt to the current market challenges.
“However, the fundamentals in subsea globally remain relatively strong and there will be opportunities for those companies who have a spread of international business and can demonstrate innovation and new technology which add value and increase efficiency. The UK subsea industry is globally renowned for its expertise, technology and entrepreneurialism and it will need to use these to adapt and innovate in the next year or two.”
Reef’s Stockton operation was launched in 2012 with the backing of its Norwegian group.
The business started with 40 staff and has since grown to around 80.
Last year the Reef Subsea AS group was bought by Norwegian private equity firm HitecVision in a £15.2m deal.
Reef Subsea UK’s administration follows problems at a number of other oil and gas supply chain firms in the North East, including the closure of Archer, job losses at Deep Ocean and Oil Consultants and a review of Flexlife’s Newcastle operation.