More oil and gas companies are expected to file for bankruptcy this year as the coronavirus pandemic continues to depress energy demand.
Thirty-three oil and gas producers with more than $50 billion of debt have sought bankruptcy protection since the coronavirus broke out in the U.S. in March, according to the latest oil patch bankruptcy report from Haynes and Boone. The Dallas-based law firm, which has been tracking North American energy bankruptcies since 2015, said bankruptcy filings this year are up 62 percent compared with the same period last year.
“As the U.S. heads into the new school year and flu season, the continued presence of COVID-19 cases in the U.S. and abroad casts a pall over worldwide energy demand and contributes to a collective gloom that prices and industry activity will not turn the corner anytime soon,” Haynes and Boone said in the report. “Without any near-term horizon hope for improving economic conditions for U.S. producers, it is reasonable to expect that a substantial number of producers will continue to seek protection from creditors in bankruptcy before this year is over.”
Fieldwood, Arena and Chaparral — oil and gas producers operating in the Gulf of Mexico -— are among the latest companies to file for Chapter 11 in recent months. Several energy companies said they were forced to file for bankruptcy after lenders pulled credit lines as revenue dried up.
Energy bankruptcies were rising before the coronavirus pandemic wiped out global demand for crude and petroleum products such as gasoline and jet fuel. Oil and gas companies were financially squeezed as capital markets pulled out of the sector after years of underperformance.
Since the last oil bust spanning 2014 to 2016, 244 oil and gas producers have filed for bankruptcy, bringing more than $172 billion in debt to court, Haynes and Boone said.
This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.