U.S. energy producers’ bankruptcy filings at four-year high
Bankruptcy filings for U.S. oil and gas producers hit a four-year high in the second quarter of 2020 due to the slowdown caused by the coronavirus pandemic, according to Oslo-based Rystad Energy.
“Chapter 11 filings for U.S. E&P (exploration and production) companies reached a four-year high in the second quarter of 2020, both in terms of total cases and cases filed by individual companies with at least $1 billion (Dh3.67 billion) in total debt,” the consultancy said in a report.
“Both in 2Q20 (second quarter 2020) and 2Q16 (second quarter 2016), the number of cases increased as WTI prices fell below $40 (per barrel), which forced operators with higher equilibrium prices to struggle to repay their debt.”
Oil prices have seen wild swings this year, mainly due to the coronavirus pandemic which has reduced demand for crude while supply has remained stable.
Brent, the international crude benchmark, fell from a high of nearly $69 a barrel in January to $19.33 in mid-March as demand faltered due to movement restrictions put in place to halt the spread of Covid-19. West Texas Intermediate – a mix of US crude grades – plunged and traded briefly below zero on April 20, hitting earnings for oil and gas producers.
Operators who survived the 2016 oil price crash “couldn’t avoid that fate this time around”, according to Rystad Energy.
Some of the largest companies that filed for Chapter 11 in 2020 include Chesapeake Energy with $9.2 billion in debt, Ultra Petroleum ($5.5 billion in debt), Whiting Petroleum ($3.6 billion in debt). dollars), Denbury Resources ($2.1 billion) and Extraction Oil & Gas ($1.9 billion).