Fundraising by oil and gas companies on Aim has dried up almost completely, threatening their future viability, according to Ernst & Young, the professional services firm.

The Aim oil and gas sector lost 45 per cent of its value in the three months to September. Share prices were hit by the falling price of crude and mounting fears the credit crunch would prevent companies from raising funds to pay for investment programmes. The smaller companies have sharply underperformed oil and gas companies on the main market, which lost 22 per cent over the same period.

Since then, however, the flow of financing has slowed to a trickle. Alec Carstairs, E&Y’s head of oil and gas mergers and acquisitions, said companies in the sector had raised just £15m on Aim in October, and there had been no significant fundraising this month.

E&Y warned of “turbulent times ahead” for the industry, with many companies having to look to asset sales or joint ventures or accepting takeover bids to avoid going out of business.

Last month, Jean Claude Gandur, chief executive of Addax Petroleum, a mid-sized company with a main market listing, predicted that all the companies below $1bn (£679m) market capitalisation would be “swept from the market” because they had no access to credit.

Small and medium-sized oil and gas exploration companies have traditionally used equity finance to search for resources, and debt to pay for developing discoveries. Both sources of funding are now almost entirely closed.

Bramlin is one example of an Aim-listed company threatened by a lack of funds. It had an attractive gas prospect in Cameroon, but was required to start drilling by next February. It had not been able to raise funds to hire a rig, so it accepted a bid from Victoria Oil & Gas, another Aim-listed company.

The deal is set to be sealed by a scheme of arrangement at a court hearing on December 5. Victoria raised £20m from a share placing in February.

George Donne, Victoria’s executive director, predicted there would be many similar deals. “Everybody in the sector is looking at very large losses from their share prices compared to where they were at the beginning of the year, and everybody is burning up cash. So there are going to be huge opportunities to pick up assets, to farm into projects and to consolidate the sector,” he said.

Although many industry executives are predicting a new wave of consolidation, differences over valuations may still prevent deals being done except in extreme cases.

Mr Carstairs of E&Y said: “The majority of Aim companies are controlled by their management, and managers will generally believe that the current share price is well below the company’s true value. So unless they are really out of cash, they will not put themselves up for sale at this time.”