US energy bankruptcy spike continues thanks to credit and squeezing oil prices

FILE PHOTO: A pump jack operates in front of an oil rig at sunset in an oilfield in Midland, Texas, United States August 22, 2018. REUTERS / Nick Oxford / File Photo

(Reuters) – 16 other U.S. energy companies filed for creditor protection last month, reflecting crude oil prices below levels that are profitable for many companies, according to a report by law firm Haynes and Boone Tuesday.

More than 50 oil and gas companies have filed for bankruptcy since the fall in oil prices in March, led by exploration and production companies with 29 filings. The amount of debt held by these companies, $ 49.69 billion, is nearly double the debt held by energy bankruptcy filers all last year, according to data from the law firm.

Oil prices fell about a third from more than $ 60 a barrel earlier this year as the COVID-19 pandemic crushed demand for fuel. They briefly turned negative in April.

Energy companies have rushed this year to cut spending by laying off workers, slashing executive wages and cutting drilling, but oil producers suffered large losses in the second quarter.

“This latest slowdown is not only affecting recently hatched small shale producers, but in July two of the biggest deposits were with established oil companies,” the lawyers wrote in a note.

Last month, oil and gas producers California Resources Corporation and Denbury Resources both filed for Chapter 11. Together, the companies have $ 7.7 billion in debt.

Shale gas giant Chesapeake Energy also filed for Chapter 11 in June, posting debt of $ 9.17 billion.

Some 21 oil service companies have filed for bankruptcy since the start of the crisis. In July, according to the report, reporters included driller Noble Corporation and hydraulic fracturing companies BJ Services and Calfrac Well Services. Hi-Crush, a supplier of fracturing sand, also applied for Chapter 11.

Only one energy and logistics pipeline company has filed for bankruptcy since the start of the crisis, but the law firm has warned that “a number of middleman companies may need to seek protection” this year .

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