Aberdeen kept afloat by oil
3 Nov 08
The energy sector has made the city an exception in the credit crunch – so far…
If one region of Scotland has a different story to tell in 2008, it is the north-east, where the high oil price of the past two years has been driving corporate activity at all levels.
Mike Brown (pictured right), managing partner with Aberdeen-based Anderson Anderson & Brown, says: “Obviously in our part of the world, the oil and gas industry is the dominant factor. It has been really very buoyant in the past several years, and that continued in 2007/08. Our fee income rose just over 45 per cent in the year to March 2008.We did predict strong growth but nothing like that.”
He adds: “We still see some strong deal flow in Aberdeen, but that is mainly through the large players in the oil and gas industry who have cash. Unless there is a fairly significant slide in the oil price, I think Aberdeen will be relatively buoyant.”
“Our net increase in head-count was 27, and we have become the largest firm in Aberdeen in terms of staff. We’ve outgrown our premises and are moving to new premises next summer, which will house about 200 people.
Brown believes that even clients in and around the oil business are feeling the downturn, though. He says: “It is very, very hard to bring into perspective what is happening with the credit crunch.”
Simon Cowie, partner with Hall Morrice, also based in Aberdeen, says: “All of our services are in great demand, and this has been reflected in growth in turnover and in employee numbers.
“Hall Morrice merged with Infinity Partnership in January 2007 and we are seeking other mergers to further strengthen the range of services offered.”
Corporate finance and advisory work have been the biggest growth areas for Hall Morrice this year, partly driven by the capital gains acceleration of deal-flow before 5 April 2008, and then by the buoyant oil and gas industry. Cowie expects fee income to be up 40 per cent by the end of this year.
“Aberdeen became very buoyant after oil broke through the $100 mark,” according to KPMG’s Craig Anderson. “People started to behave as if there was no longer a cycle in the oil and gas industry.”
“It’s probably been the one area where we’ve seen a high volume of transactions,” says Deloitte’s James Baird, but he goes on to warn: “Oil is now falling.”