King Salman, Crown Prince send condolences to Macron on death of France's ex-president    Hajj Ministry warns against bogus Umrah permits    'UAE committed to resolving Palestinian-Israeli conflict'    COVID-19 recovery focus of UN General Assembly special session    Amid ‘unprecedented' needs, UNICEF seeks $6.4bn in aid to help 190mn kids    Sadara Launches On-Job Training for Saudi Fresh Graduates    Custodian of the Two Holy Mosques Condoles President of France on Death of Former President    Custodian of the Two Holy Mosques Condoles Chairman of Transitional Sovereignty Council of Sudan on Death of Umma Party Leader and former Prime Minister    Oilfield service purchases set to lose $340 billion until 2028    UK's COVID-19 Death Toll Surpasses 60,000    New Coronavirus Infections in West Bank Rise to Record High    LuLu launches Italian food festival 'Let's Eatalian'    Yamaha's Adrien Van Beveren tops massive bike and quad entry for Hail Bajas    Health Ministry: 230 New Confirmed Cases of COVID-19 Reported in Saudi Arabia    Proactive judiciary helps recover R12bn stalled projects funds of 30,000 investors    KSrelief Continues Distributing Bread Loaves to Needy People in Akkar Governorate, Lebanon    President of IsDB Meets with Benin's Minister of State in Charge of Planning and Development    Executive regulations on labor reform initiative in the offing    Worldwide Coronavirus Cases Cross 64.03 Million, Death Toll at 1,489,276    Single-day COVID-19 cases top 1,300 again as UAE combats second wave    Saudi Aramco says teams working to fix technical glitch in Jazan pumping facility    Over 273,000 Individuals Benefit from Tetamman Clinics in Riyadh    ILO: Coronavirus drives wages down and increases inequality    Sullivan breaks course record with a 61 to lead DP World event    UAE marks 49th National Day with 5 different GWR attempts    Saudi Stock Exchange Main Index Ends Trading Lower, at 8,694.13 Points    Saudi Arabia is the Safest among G20 Countries According to International Indicators    Lewis Hamilton to miss Sakhir Grand Prix after testing positive for coronavirus    ARM, BUTT Sports, CSG, ICAD, M Eagles, R Jurana maintain winning streak in Ace Travel Saudi Cu    British actor Prowse who played Darth Vader dies aged 85    Mahrez hat-trick as Manchester City thrash Burnley 5-0 yet again    Late penalty leaves Liverpool with draw at Brighton    Rapper Shouly releases debut solo album ‘The Empty Quarter' Album tackles big issues including fear, vice, anxiety, family, and religion    Improving immunity key reason to participate in Dubai Fitness Challenge    Argentina Soccer Legend Maradona Dies of Heart Attack    Coman rescues 1-1 draw for Bayern against Werder    MCIT Launches Initiative to Raise Awareness on Cyberbullying    Council of Senior Scholars: Muslim Brothers' Group Don't Represent Method of Islam, rather only Follows its Partisan Objectives, Violating our Graceful Religion    Saudi Medical Team Restore Young Man's Lost Vision, One Year later    KSrelief Organizes Awareness Campaign on Breast Cancer in Aden Governorate, Yemen    Ithra Signs Agreement with Supreme Council of Antiquities of Egypt    Court facilitates young woman's marriage after stripping father's guardianship    Bahrain's top Islamic body condemns attempts to insult Muslim symbols    Saudi man accused of harassing foreign wife asked to be produced before court Court allows divorce, custody of children by mother    S. P. Bala, legendary Indian singer, dead at 74    Eid Al-Adha Prayer Performed at the Grand Holy Mosque    Pilgrims Perform Dhuhr and Asr Prayers in Arafat Holy Site    Senior Scholars Council Issues Decision No. 246 Regarding Attendance of Friday Prayer and Prayers at Mosques in a Case of Spread of Epidemic or Fear of its Spread    

Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.

North American oil and gas bankruptcy debt reached an all-time high in 2020
Published in The Saudi Gazette on 23 - 10 - 2020

The associated debt from North American oil and gas bankruptcies in 2020 has already reached an all-time high and is set to grow even further this year as the wave of Chapter 11 filings continues, a Rystad Energy report projects, analyzing industry data from law firm Haynes and Boone.
Although the combined count of Chapter 11 filings from exploration and production firms (E&Ps) and oilfield service (OFS) companies this year in North America has so far reached 84, which is still lower than the historical high of 142 in 2016, the associated debt these companies are carrying is much higher, at $89 billion so far, some $19 billion more than in 2016.
Under the current price environment Rystad Energy projects that more bankruptcies will follow this year, adding to the cumulative associated debt and boosting it to a staggering figure of over $100 billion.
Assuming a WTI average of around $40 per barrel this year and a Henry Hub price of $3 per MMcf, we forecast North American E&P bankruptcies to rise to 55 by the end of the year, from 40 filings at the time of writing, adding about $15 billion of debt to the cumulative total. And that excludes possible associated debt additions from new OFS company bankruptcies, which currently stand at 44 cases.
Under this scenario, associated debt for these 55 E&P Chapter 11 filings this year is projected to reach $69 billion. Should these price levels persist in 2021, Rystad Energy expects 54 new E&P bankruptcies for the year, carrying an associated debt of about $44 billion.
In a more pessimistic scenario that assumes a Henry Hub price of $2.5 per MMcf, E&P bankruptcies could climb to 61 cases this year and to 68 in 2021.
In terms of the number of Chapter 11 cases, it is unlikely that we will ever see a repeat of 2016, when 142 E&P and OFS filings were recorded in North America.
The previous market downturn caused a large number of smaller producers and suppliers severe financial distress, including many that were active in conventional oil & gas operations who ended up downing their shutters for good.
The current wave of bankruptcies is different, and it is hitting a significant number of larger companies in multiple business segments. In the first nine months of the year, the average Chapter 11 debt per company was at $1.05 billion, almost twice as much as the 2017 level of $576 million.
Both E&P and OFS bankruptcies are on average demonstrating a record-high debt size so far this year, of $1.34 billion for E&Ps and $792 million for OFS. However, the total full-year Chapter 11 debt for the E&P and OFS groups separately is yet to beat the previous record of $56.8 billion for E&Ps in 2016 and $35.3 billion in 2017 for OFS. Most likely both these records will be breached in 2020 after the end of the fourth quarter.
"While oil and gas market fundamentals have improved significantly now compared with April-May, we argue that the North American bankruptcy wave is not over yet.
"A significant number of small- and mid-size public and private producers are still experiencing financial challenges in the current price environment and questions about their ability to service their debt in 2021-2022 remain," said Artem Abramov, head of shale research at Rystad Energy.
We conclude that while this year might see the number of Chapter 11 cases peak, it will definitely be the peak in terms of total Chapter 11 debt, with the average debt per case next year expected to decline substantially.
Yet, we argue that the number of filings will still remain above the level recorded in 2019 over the next two years, as the industry keeps navigating through the challenging market environment. — Rystaad Energy

Clic here to read the story from its source.