Let's hope, now that all the unseemly/unsightly earnings reports are out of the way--we get some good news. Hope Springs Eternal.........
Few people, excluding dim witted bankers and investors, have a taste for assets which lose money. That is not really that surprising.
The pace of oil patch bankruptcies is picking up. According to a new count from Houston law firm Haynes & Boone, April saw 11 bankruptcy filings, the most of any month in the past two years. The headline failures that month were Ultra Petroleum UPL +%, which buckled under $3.9 billion in debt, and Energy XXI, which carried debt of $2.9 billion.
All told, 69 oil and gas producers with $34.3 billion in cumulative secured and unsecured debt have gone under. Since share prices peaked in 2014, the oil bust has wiped out about $1 trillion in equity, with the Dow Jones U.S. Oil & Gas Index off 40%.
There’s more to come. “Despite the modest recovery in energy prices, all indications suggest many more producer bankruptcy filings will occur during 2016,” writes Haynes & Boone. According to Deloitte , about a third of global oil and gas companies, or about 175 of them, are at risk of insolvency. Bernstein Research estimates that by 2019 we’ll see more than $70 billion in defaults amid more than $400 billion in high-yield energy debt — that would indicate that we’re only halfway through the bankruptcies.
The biggest failure of the oil bust so far has been Canadian-listed Pacific Exploration & Production, which produces heavy oil in Colombia, and entered bankruptcy with $5.3 billion in debt.
Second-biggest is Tulsa, Okla.-based Samson Resources, which K.K.R. acquired from the family of billionaire Lynn Schusterman in a 2011 LBO for $7.2 billion, including more than $4 billion in debt. In its bankruptcy filings, Samson estimated its value at $1.5 billion.
What’s striking is how little the creditors of some of these bankrupt firms are getting in liquidation. Quicksilver Resources filed Chapter 11 with $2.1 billion in debt. Its assets, in the Barnett shale and west Texas, eventually sold for just $245 million in cash.
Meanwhile, Dune Energy only got $20 million for its oil and gas fields in Texas and Louisiana, against $144 million in debt. BPZ Resources, which operates in Peru had $275 million in debt; its assets sold for only $9 million.
Here, according to Haynes & Boone’s Oil Patch Bankruptcy Monitor, are the 15 biggest bankruptcies (so far).
Pacific Exploration & Production – $5.3 billion in debt
Samson Resources – $4.3 billion
Ultra Petroleum – $3.9 billion
Sabine Oil & Gas – $2.9 billion
Energy XXI – $2.8 billion
Quicksilver Resources – $2.1 billion
Midstates Petroleum – $2 billion
Venoco – $1.3 billion
Swift Energy – $1.2 billion
Energy & Exploration Partners – $1.2 billion
Magnum Hunter Resources – $1.1 billion
Milagro Oil & Gas – $1 billion
New Gulf Resources – $600 million
Goodrich GR +% Petroleum – $500 million
ERG Resources – $400 million
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Attached are the Texas Dune completions and drilling permits.
Dang!
I could have sold this deal to some of the Swells I know!!
Always interesting reading your take on stuff, Paul.
What's your blunt opinion about the TMS? Pick a realistic price range for oil at some point in the future.
And I know this is somewhat off-topic, but you have previously brought up investment advice as it relates to production potential.
I only deal with what is in the public record.
I never claimed to have a crystal ball.
I'll leave the speculation and generalities to others.
Shale drilling and lithium extraction are seemingly distinct activities, but there is a growing connection between the two as the world moves towards cleaner energy solutions. While shale drilling primarily targets…
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AboutAs exciting as this is, we know that we have a responsibility to do this thing correctly. After all, we want the farm to remain a place where the family can gather for another 80 years and beyond. This site was born out of these desires. Before we started this site, googling "shale' brought up little information. Certainly nothing that was useful as we negotiated a lease. Read More |
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