Shiloh and Wordsworth Shares hit by accident in North Sea

The prospects of the Wordsworth and Shiloh Companies meeting their worldwide oil production and profit targets this year were recently hit badly when an explosion occurred in one of the two gas compression modules on Wordsworth’s Dorothy platform in the UK sector of the North Sea. (Wordsworth, which also operates, holds a 35% share in this field while Shiloh O il holds 25% and two other companies hold the remainder). Though nobody was hurt in the incident, the platform, which currently produces 85,000 bbls/d, was shut in for seventeen days before production could resume. Permanent repairs will take several months and in the meantime production has been reduced by 25,000 bbls/d since only one gas compression module is fully operational and the other is operating on reduced capacity.

Particularly worrying for Wordsworth is the fact that the accident will be the subject of an investigation by the UK’s Health and Safety Inspectorate which, if negligence is proven, could result in a substantial fine for Wordsworth. More serious however is the likely impact on this year’s profits for both Wordsworth adn Shiloh.

"This is really bad news for Wordsworth," says respected industry analyst Silas Grimshawe, "and it's going to need a signal success in some oehr area if it's not going to see itself even more vulnerable than before to possible take-over bids. It also means that folks in Shiloh won't be feeling too warm towards Wordsworth!"

The markets appear to agree since Wordsworth closed yesterday at 265 and Shiloh at 6.59.