The consultancy's Oil and Gas Eye Index, which monitors the sector within London's Alternative Investment Market (AIM), fell 12 percent in the second quarter.

By contrast, the broader AIM market lost only 5 percent, and the FTSE 350 Oil & Gas Producers' Index of mainstream oil and gas stocks fell by only 2 percent, oil and gas transactions partner Jon Clark noted in the Eye Index's latest report.

Meanwhile, second quarter equity fundraisings among Oil and Gas Eye Index stocks totalled just 42.1 million pounds ($65.5 million), 76 percent down on the first quarter and the lowest since the first quarter of 2009, even though such fundraisings across AIM were up 21 percent from the first quarter.

"The lack of confidence evident in the decline of the index had a pronounced impact on overall market demand for the sector and contributed to the very low levels of fundraising," said Clark in the latest index report.

He said he still saw a divergence in the availability of capital within the industry, with larger players finding sources of finance relatively plentiful, while smaller companies were finding things increasingly tough.

"At the smaller end of the spectrum, those companies that can deliver and communicate exploration and commercial success will crowd the others out. The remaining companies will be compelled to seek out alternative funding routes, which could result in further consolidations as the year progresses."

Seventy-nine percent of Oil and Gas Eye Index stocks fell in the quarter, mostly because of poor drilling results, the report said.

It picked out Wessex Exploration (>> Wessex Exploration plc) and Northern Petroleum (>> Northern Petroleum Plc) after their drilling disappointment in French Guiana; New World Oil and Gas (>> New Look Group plc) after a poor hydrocarbon show in Belize; Kea Petroleum (>> Kea Petroleum Plc) for its abandonment of a disappointing well in New Zealand, and Petroceltic International which failed to find worthwhile deposits off Bulgaria's coast.

(Reporting by Andrew Callus; editing by Keiron Henderson)

By Andrew Callus