The number of oil patch bankruptcies continues to rise, and the number of large companies with billions owed to creditors is accelerating.
This revelation comes from to law firm Haynes and Boone LP’s Oil Patch Bankruptcy Monitor. The Oil Patch Bankruptcy Monitor is updated every few months and since its inaugural issue at the beginning of 2015, the report has highlighted bankruptcies, including Chapter 7, Chapter 11, Chapter 15, and Canadian cases, which involve approximately $66.5 billion in cumulative secured and unsecured debt
ValueWalk has followed the trends in Haynes and Boone’s Oil Patch Bankruptcy Monitor closely since its inception last year.
Up until April of this year, the number of oil patch bankruptcies was growing steadily but seemed to be manageable. Between last November and March this year, 15 firms collapsed owing a total of $4.4 billion in both secured and unsecured debt, a relatively manageable amount
- Oil Patch BankruptciesTotal $13.1 Billion So Far This Year [Update 1]
- Oil Patch BankruptciesHit $17.4 Billion [Update 2]
- Oil Patch Bankruptcies Hit $34.3 Billion
However, after a relatively subdued start to the year, April turned into a blood bath for struggling oil companies and their creditors as 18 North American oil and gas producers filed for Chapter 11 listing $14.9 billion in debt, more than any other month covered by the report so far.
Then during May Linn Energy, Penn Virginia, Breitburn Energy LP, and Halcon Resources all filed for bankruptcy protection as the spring borrowing base redeterminations really started to bite.
According to Reuters, after the April surge in oil patch bankruptcies, the number of North American energy bankruptcies was closing in on the record 68 bankruptcy filings for one industry seen during the depths of the telecom bust of 2002 and 2003. It the oil patch has now surpassed this total.
Oil patch bankruptcies: Largest failures
Since the beginning of 2015, Haynes and Boone has tracked 90 North American oil and gas producers that have filed for bankruptcy. As of August 1, 2016, 48 producers have filed bankruptcy so far this year, with approximately $49.3 billion in cumulative secured and unsecured debt.
During July, 4 E&P companies filed bankruptcy with cumulative debt of approximately $5.2 billion and 5 E&P companies filed for bankruptcy during June, with cumulative debt of approximately $1.5 billion.
The largest failures this year are Sandridge Energy, Inc ($8.3 billion in total debt), Linn Energy, Llc., ($6.1 billion in total debt), Breitburn Operating Lp., ($5.8 billion in total debt) and Pacific Exploration & Production Corp. ($5.3 billion in total debt) all of these occurred during the past four months. The larges bankruptcies of July are Atlas Resource Partners, L.P. ($3.2 billion in total debt) and Halcón Resources Corporation ($1.4 billion in total debt).