Oil price rout claims first major stock market victim in Norway's Dolphin Group

The collapse of oil prices has claimed its first bankruptcy victim in Norway’s offshore industry, and analysts warn more may follow.

Dolphin Group, a seismic surveyor that maps the sea bed for oil and gas reservoirs, became the first Oslo-listed company in the industry to file for bankruptcy earlier this week.

One of its competitors, Polarcus, is in talks on restructuring debt.

However, the threat will not stop there, with insolvency cases bound to multiply among drillers as well, analysts say.

“Drilling companies might be next in line,” said Eirik Rohmesmo, a credit analyst at Clarksons Platou Securities.

“Drillers are now living off their existing contracts taken out at market peak, but these are running out.”

Oil producers are cutting spending globally to cope with a plunge in oil prices and there is likely to be little let up next year, with Brent crude hitting a new seven-year low on Monday of $36.33 a barrel.

Investment off Norway’s shore will this year fall the most since 2000.

“There will clearly be more” bankruptcies, Lars Kirkeby, chief credit analyst at Nordea Markets in Oslo, said.

“There will gradually be challenges for many supply shippers and, later on, for rig companies.”

Producers and other service companies are also being squeezed.

Even as Statoil yesterday announced almost $3bn in new offshore maintenance contracts, news emerged that it’s offering all its employees a buyout option, according to Stavanger Aftenblad.

Norway’s biggest oil producer is seeking to reduce its workforce by 4,500 in the three years to 2016 as lower oil prices puts pressure on the Norwegian offshore industry, which accounts for about a fifth of GDP.

Norway’s biggest offshore engineering company, Aker Solutions ASA, said it may now need to cut further jobs and close down offices after it failed to win the contracts from Statoil.

Dolphin’s petition is “a bad sign for Polarcus”, which is already in debt restructuring talks, said Haakon Johansen, an analyst at Fondsfinans.

The Polarcus chief financial officer Tom Henrik Sundby, said “the company will not start speculating on the outcome of the ongoing discussions”, saying as of last week it had a cash balance of about €62m.