Herbies gets Ernst & Young call as downturn swallows first oil company

Herbert Smith is advising Ernst & Young (E&Y) on the administration of one of the first oil companies to fall victim to the credit crunch.

North Sea oil exploration company Oilexco North Sea has been put into administration after its financing banks, led by Royal Bank of Scotland (RBS), refused to provide it with any further finance.

In December 2008 the banks gave the company a bridging loan to allow it time to find a buyer. When this failed, E&Y was called in.

Herbert Smith finance partners Jason Fox and Adrian Cheng advised the banks, with insolvency ­partners Kevin Pullen, Stephen Gale and Laurence Elliott now advising E&Y.

The ;firm ;has ;been involved with Oilexco North Sea for a number of years, and in 2006 Fox and Cheng advised RBS when it made a $245m (£168.54m) loan to the company.

Morgan Stanley and ­Merrill Lynch are carrying out a strategic review of the business with the aim of either securing alternative funding or finding a buyer.

Oilexco North Sea is the UK subsidiary of Canadian oil and gas exploration and production company Oilexco. Only the UK business has been put into administration, but the parent ­company took advice from McCarthy Tétrault London managing partner Robert Brant.