Headlines lately are shedding
light on a frightening trend – oil and gas bankruptcies are on the rise:
- The Wall Street Journal – Oil and Gas
Bankruptcies Grow as Investors Lose Appetite for Shale: Smaller
Drillers, Which Account for Sizable Part of U.S. Oil Production, are Struggling
to Pay Off Hefty Debt Burdens
- Oil & Gas 360 – Energy Bankruptcies
Back on the Rise in 2019
- OilPrice.com – What Caused the
Recent Surge in Oil and Gas Bankruptcies?
- Houston Business Journal – Texas Energy Data
Wrap: State Sees Wave of Oil and Gas Bankruptcies
According to Haynes and Boone, LLP’s August 2019 Oil Patch Bankruptcy Monitor, there has been an increase in the number of oil and gas bankruptcy filings, especially since May of 2019 – 26 exploration and production (E&P) firms have reportedly filed for bankruptcy through mid-August this year, with debts reportedly totaling $10.96 billion.
A number of factors are
contributing to the increase in oil and gas bankruptcies – oil price is chief
among them. Further, according to the Oil
& Gas 360 article, one of the reasons behind the bankruptcies is, “a
displeased Wall Street cutting off the access to capital for most companies.”
Many are waiting with bated breath to receive updated data on the number of bankruptcies – as of the date of the August Oil Patch Bankruptcy Monitor, there had already been 4 bankruptcies in the month of August, according to the report’s 2019 bankruptcy list.
While not an issue isolated to
the Rocky Mountain region but impacting all producing states, many in Colorado
are concerned that the recent legislation in the state may become yet another
contributing factor to increasing bankruptcies in the energy sector.
Will oil and gas bankruptcies
continue to rise for the rest of the third and fourth quarter? Will Colorado be next to see a wave of
bankruptcies? Only time will tell…