26 Dec

US Oil and Gas Companies’ Debt Exceeds $200 Billion

WRITTEN BY Gordon Kristopher FEATURED IN Macroeconomic Analysis

Oil companies’ bankruptcies

US oil and gas exploration and production companies are under severe pressure due to historically low oil prices, rising interest rates, and consensus of lower oil prices over the long term. The Federal Reserve Bank of Dallas has reported that oil companies’ bankruptcies have reached the level met during the 2008 recession. Nine oil and gas companies with debt more than $2 billion have filed for bankruptcy in 4Q15. Consequently, 70,000 oil jobs have been lost in 2015.

US Oil and Gas Companies’ Debt Exceeds $200 Billion

Oil exploration and production companies’ debt

The higher break-even costs and production costs of the US oil and gas producers and the lower oil prices are the major causes for the bankruptcies. Many oil and gas companies are on the verge of filing more bankruptcy cases. This means the production from these companies could vanish, as expected by OPEC members. The Wall Street Journal suggests that the total debt of US oil and gas exploration and production companies, excluding Chevron (CVX) and ExxonMobil (XOM), is more than $200 billion as of 2014. In 2015, 36 oil exploration and production companies have filed bankruptcy proceedings, according to data from law firm Haynes and Boone. These companies had $7 billion secured and $6.1 billion unsecured debt.

In 2015, Samson Resources, Sabine Oil & Gas, and Quicksilver Resources were the largest oil production bankruptcy cases, with debts of $4.3 billion, $2.9 billion, and $2.1 billion, respectively, This is a huge loss to creditors.

Independent oil exploration and production companies Swift Energy (SFY), Energy XXI (EXXI), Halcón Resources (HK), and Goodrich Petroleum (GDP) might also file for bankruptcy, according to a Forbes estimate. These companies have huge debts and have lost more than 90% of their market capital in the last year.

ETFs such as the iShares US Oil Equipment & Services ETF (IEZ), the Vanguard Energy ETF (VDE), and the First Trust Energy AlphaDEX ETF (FXN) are also affected by the roller coaster ride in the energy market. Read how Russia is affected by the oil market turmoil in the next part of this series.

 

 

Latest articles

In another setback for Boeing (BA), China might not buy the company's 737 MAX jets as part of its trade negotiations with the US.

19 Mar

Micron Stock's Ups and Downs

WRITTEN BY Paige Tanner

Micron was the hardest hit by the semiconductor downturn due to weak economic demand arising from the US-China trade war.

19 Mar

What to Expect from CannTrust's Q4 Earnings

WRITTEN BY Adam Jones

CannTrust (CTST) announced that it's scheduled to report its fourth-quarter earnings on March 28 before the market opens.

Yesterday, Apple (AAPL) launched a newly upgraded range of its iPad Air and iPad mini devices ahead of its March 25 special event.

19 Mar

Nike Gears Up to Deliver Its Q3 2019 Results

WRITTEN BY Sharon Bailey

Nike (NKE) is scheduled to report its earnings results for the third quarter of fiscal 2019 after the market closes on March 21.

On March 18, Chesapeake Energy’s (CHK) implied volatility was 51.9%, which is ~14.7% less than its 15-day average.