Oil at $45 a Barrel Proving No Savior as Bankruptcies Pile Up
Three bankruptcies this week shows that $45 a barrel oil isnt enough to rescue energy companies on the verge of collapse.
Since the start of 2015, 130 North American oil and gas producers and service companies have filed for bankruptcy owing almost $44 billion, according to law firm Haynes & Boone. The tally doesnt include Chaparral Energy Inc., Penn Virginia Corp. and Linn Energy LLC, which filed for bankruptcy this week owing more than $11 billion combined.
At least four more oil and gas companies owing more than $8 billion are nearing default, including Breitburn Energy Partners LP and SandRidge Energy Inc. Bankruptcies have accelerated as cash-starved companies find it almost impossible to raise capital. Energy companies have been virtually shut out of the high-yield bond markets, banks are cutting credit lines and asset sales have slowed.
"I dont think the E&P model in North America is economic and I dont think it was real economic even at $80 and $100 oil," Jim Chanos, Kynikos Associates founder and president, said in an Bloomberg TV interview Thursday. "Its certainly not economic at $45 oil."
Several more are struggling to sustain crippling debt loads. SandRidge Energy, which owes $4.13 billion, said in its annual financial report that auditors have raised doubts about its ability to stay in business. It delayed releasing its first-quarter results, citing ongoing discussions with creditors on a potential comprehensive restructuring transaction. Breitburn, which owes $3 billion, missed interest payments in April and is in talks with creditors.
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http://www.bloomberg.com/news/articles/2016-05-12/oil-at-45-a-barrel-proving-no-savior-as-bankruptcies-add-up
tonyt53
(5,737 posts)That was break even, with no money for exploration or profit
Purveyor
(29,876 posts)Dustlawyer
(10,494 posts)All of the extra oil caused OPEC to dump to sweat out these companies. It appears to be working.
Purveyor
(29,876 posts)Boldine
(86 posts)the workers laid of yes, but the companies themselves no. They lived high on the hog when oil was over $100 a barrel - what did they do with the $$$? Ordinary people are told to save for a rainy day - why don't these companies. As for exploration - we been told that for decades. I rather think most of that "exploration" is the lobbyists who swarm Congress.
I was talking to a man the other day who is working his way back to the Texas oilfields and looking forward to when he can $6000 every two weeks (not sure if it was true but that is what he told me). I asked him that now prices are lower, people can afford to drive and go on extended trips and that also helps the oil companies. His reply was don't care I want oil prices to go up so I can earn the $$.
Wellstone ruled
(34,661 posts)neighbors son. Living with Dad and working for a Cable Company until the Patch regains it's momentum. Yes,he was knocking down 5-6k ever two weeks.