ASX-listed GR Engineering has flagged a hit to annual profits following news that Northern Oil & Gas Australia has gone into voluntary administration.
Nearly a fortnight ago administrators were appointed to Northern Oil and its associated subsidiaries TOGA Services and Timor Sea Oil & Gas Australia.
The company's administration came just months after its Northern Endeavour FPSO in the Timor Sea was shut down by the federal regulator over safety and environmental concerns.
GR's wholly owned subsidiary, Upstream Production Solutions, is the contracted operator of the Northern Endeavour FPSO.
Yesterday, GR told the market it had conducted "extensive discussions" with the administrators of Northern Oil and assessed its exposure at more than $17 million.
"GR Engineering's assessment of the group's exposure to the [Northern Oil] contract is circa $17.4 million representing receivables and work in progress ($15.9 million) and the finalisation of commitments to vendors and suppliers ($1.5 million)," GR said in a statement.
The administrators have agreed to pay GR costs for services from the date Northern Oil was placed into administration, subject to funding from a secured lender.
Source: Energy News Bulletin
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