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Page added on August 10, 2017

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Oil bankruptcies slow dramatically this year


The number of North American oil companies shuffling into bankruptcy court has fallen dramatically this year, a new report shows.

Fourteen oil producers filed for Chapter 11 bankruptcy protection in the first half of the year, down from 50 in the first six months of 2016, according to Dallas law firm Haynes & Boone.

The cases filed this year, including Colorado oil explorer King’s Peak Energy, Canada’s Rooster Energy and Houston-based Vanguard Natural Resources, involved a combined $5.1 billion in debt. All told, 128 U.S. and Canadian oil producers have carried some $79.3 billion in debt into bankruptcy court since 2015.

“Many companies that needed to restructure either have gone through bankruptcy or reached out-of-court settlements with creditors,” said Ian Peck, a partner at Haynes & Boone, in a statement.

And it appears oil producers have adjusted to oil prices hovering between $45 and $55 a barrel. But that resiliency may not last forever, he said, adding bankruptcy cases may increase again in coming months.

“Despite the industry’s new stability at this price point, a prolonged pricing trough may ultimately be too difficult for some players to bear,” Peck said. Some companies, he said, may have to go through bankruptcy proceedings a second time.

Meanwhile, 32 oil field service companies have filed bankruptcy papers this year, down from 39 in the first half of 2016. The cases filed this year involved $16.4 billion in debt.



9 Comments on "Oil bankruptcies slow dramatically this year"

  1. Sissyfuss on Thu, 10th Aug 2017 7:37 pm 

    Is this good news, bad news or fake news?
    Depends on your perspective.

  2. Outcast_Searcher on Thu, 10th Aug 2017 10:52 pm 

    A little less is far from “dramatic”.

  3. Makati1 on Thu, 10th Aug 2017 11:33 pm 

    Considering the source, I would say it is pure Texas bullshit.

  4. rockman on Thu, 10th Aug 2017 11:42 pm 

    Sissy – “Is this good news, bad news or fake news?”. First, it’s certainly not fake news. Firms like H&B get there data from the govt’s SEC.

    It’s good news for the creditors or the owners of the companies filing bankruptcy. In some cases the original owners retain control. Control of a company with a significant reduction in debt and interest payments. And typically a new credit line that allows them to get back in the game.

    Or in cases like Halcon lose most if not all of their interest in the company. Post-bankruptcy the creditors received 96% of the stock, several hundred $million in cash and future hundreds of more $millions in future cash payments guaranteed by the bankruptcy court. The company also got an asset based credit line of $600 million they are currently using to drill in the new hot play in the Permian Basin. Time will tell but the creditors may end with an asset worth significantly more then the original debt.

    But industry wide the bankruptcies are not very relevant. Dependening on which numbers you believe the total outstanding debt is $2.5 to $3 TRILLION. All told $79.3 billion in debt has been involved in the bankruptcy court since 2015. Which means about 97% of the debt is still being serviced by the companies that haven’t filed bankruptcy. Those companies may not be in great financial shape but they are still functioning. And as I showed in detail on my thread many of the companies have come out of Chapter 11 are in better financial shape then some of their peers that haven’t had to file bankruptcy. There’s actually one hypothesise being tossed out thar improved oil prices might lead to an increase in bankruptcy files: the increased value of a company’s reserves could act as stronger leverage for companies to negotiate with their creditors.

    Essentially the number of companies filing bankruptcy isn’t of any meaningful consequence compared to the general damage inflicted by the oil price decline. Some folks here and many in the MSM started tossing out the word “bankruptcy” as if it represented the beginning of the end of the petroleum industry. In reality the number of bankruptcies and companies disappearing in the oil price bust of the early 80’s was much was much more severe then what we’ve seen so far. Before that financial slaughter there were a number of Big Oils, like Mobil Oil, Texaco, Phillips Petroleum, Petrofina and Gulf Oil, that didn’t survive. We haven’t lost any during this bloodbath…yet. In fact the names of most of the companies filing bankruptcy this time aren’t familiar to many here.

  5. Anonymouse on Fri, 11th Aug 2017 2:20 am 

    Narrativeman forgot to mention those ‘big’ oilcos in the 80s survived just fine….. they just merged. Sure their logos and brand-names did not ‘survive’, but otherwise, they never ‘went’ anywhere. Still very much ‘alive’ in 2017, albeit with a new coat of paint.

    You’d think someone who purports to be the resident ‘expert’ on all things oily here would make such an elemental mistake ……

  6. Davy on Fri, 11th Aug 2017 5:21 am 

    mouse, since you don’t understand finance and business I can see how you would lump the 80’s oil mergers into some kind of anti-American and anti-Oil agenda. What happened in the 80’s with big oil is multi-dimensional and bigger than your two sentences. The 80’s was a decade of big changes for oil. The highs and lows were intense. You guys with agendas end up looking intellectually lazy when you try to make your points instead of addressing the truth.

  7. rockman on Fri, 11th Aug 2017 9:20 am 

    “…those ‘big’ oilcos in the 80s survived just fine….. they just merged. Sure their logos and brand-names did not ‘survive’, but otherwise, they never ‘went’ anywhere.” No, they didn’t survive…they no longer exist. Their assets were acquired in those acquisitions. And today most of those assets no longer exist: they’ve been depleted. IOW the only thing that remains of Mobil Oil is its name as part of ExxonMobil. Even the names “Texaco” or “Gulf Oil” didn’t survive. And neither did their drilling budgets, the employees or reserves. Had they not been acquired these companies could still be drilling and developing new reserves.

    But they aren’t. LOL.

  8. twocats on Fri, 11th Aug 2017 9:36 am 

    I would say 11 down from 50 is dramatic, but interesting that the oil service companies barely budged from 39 to 32. that is how the oil companies are staying in business. that and subsidies from CB direct asset purchases which is going strong at 100’s of billions a month. as long as the funny money continues to zimbabwenize certain parts of the economy without affecting consumer prices we should be okay.

  9. Kenz300 on Sat, 12th Aug 2017 1:00 pm 

    Fossil fuels are the past and were good investments in the past.

    Wind, solar, geothermal, hydro and other forms of sustainable energy are the future.

    Investors that make money are those that see where the world is going and invest in the future.

    Coal investors have lost their shirts. Oil will follow. The only hope for oil producers is to diversify before it is too late.

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