Midstates Petroleum and Ultra Petroleum declare Bankruptcy
May 2(Reuters) - Oil-and-gas producers Midstates Petroleum Co Inc and Ultra Petroleum Corp have filed for Chapter 11 bankruptcy protection, joining several companies that have been unable to meet debt obligations after a steep decline in energy prices. Oklahoma-based Midstates and Houston-based Ultra have a combined $5.8 billion in debt, according to court documents filed in Houston's U.S. Bankruptcy Court over the weekend. The two join dozens of U.S. oil and gas producers that have filed for bankruptcy since the start of 2015. After years of using junk bonds to fuel a frenzy of shale drilling, energy prices began to decline in late 2014 and left many exploration and production companie unable to service their obligations. Both companies entered bankruptcy as banks are conducting regular six-month reviews of their lending to energy producers. There are signs that banks may take a tougher line this spring, deepening the financial crisis for many producers. Midstates said it had reached agreements with significant groups of creditors to cuts its $2 billion of debt by more than $1.8 billion. Ultra said in court filings it planned to engage creditors to reduce $3.8 billion in debt, all of which is unsecured. Midstates went public in 2012, raising nearly $500 million. Its shares were down 34 percent at about 19 cents in early over-the-counter trading. Its stock was trading at more than $70 per share when energy prices began to fall in 2014. Shares of Ultra were halted at 31 cents. Ultra produced 290 billion cubic feet of natural gas in 2015, and operates in Wyoming, Utah and Pennsylvania. Midstates operates in Texas, Louisiana and Oklahoma and produced 12 million barrels of oil equivalent in 2015. Despite the pace of energy-producer bankruptcies, to date there has been little impact on U.S. energy production, undercutting some analysts' expectations for a sudden output decline. Some producers that entered bankruptcy are beginning to emerge, but even those that eliminated all of their debt may struggle to grow again.
(Reporting by Tom Hals and Tracy Rucinski in Chicago; Editing by Bernadette Baum
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Replies to This Discussion
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Permalink Reply by Paul Butler on
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Ultra said in court filings it planned to engage creditors to reduce $3.8 billion in debt, all of which is unsecured.
Mind boggling--suckers.
I didn't know you could get 3.8 billion in unsecured debt. That's a neat trick!
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Permalink Reply by Paul Butler on
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If we ever get reform, i.e., an end to the reckless/mindless speculation-a return to growth for oil and gas reasons, and sanity returns to the patch it will be because of the elimination of two accounting sleights of hand:
1.
Eliminate Full Cost Accounting, which is barred/highly restricted under International Financial Reporting Standards; and
2.
Eliminate the PUD’s (Proved Undeveloped Reserves) from GAAP accounting. PUD’s history has shown they are fluid, like the "Code of the West," which in a jam can mean anything the hell you need it to mean.
Those two accounting sleights of hand are largely responsible for all the funny money, dilettantes and charlatans in the Patch.
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Permalink Reply by Paul Butler on
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It would also help to eliminate the no accounts, ne'er do wells and know it all's, not to mention the touts, louts and pimps.
This industry needs to be cleaned up. It will either be done from within or it will be done from without.
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Permalink Reply by Joe Aldridge on -
Paul,
A very wise old independent oilman once told me many years ago that we are dealing with nations on the other side of the world that are literally sitting on a "sea of oil". "They can price you into the basement anytime they want". Very few people understand this. What it really comes down to is: Risk and Reward. If you look back just 10 years ago the estimates were that we would be at $200+ per barrel by now because we - the US - as producers were running out of oil. Our American inventiveness, technology and investment opened the door shortly after that to more production than the market can use at the present time. Who would believe that we could or would find enough new production to be in the position of exporting that we are now. And one of the first things that the industry wanted was to have the export ban deleted. Which they did. This was a direct threat to the Arabs and they responded. Call it "seeing the hand writing on the wall". They decided that it was to their benefit to shut down the Frackers and they have done that with over production. I think the answer to your last sentence is individual. What is the risk and what is the reward with no knowledge of what new developments will be invented. The knowledge of what the true economics of the enterprise are; cannot be seen. So the question is: Are we going to be stagnant or are we going to take the risk and hope there is a reward.
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Permalink Reply by Paul Butler on
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Ted Turner said "business is war."
The Arabs didn't employ anything but standard competitive conduct.
I get my information mainly from Bloomberg Energy and the Financial Times. The Arabs were saying, since around 2000, they will protect market share.
They did.
The Shalers should have planned for the competition and grown more slowly.
Greed, hubris and a lust for power got the best of many companies.
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Permalink Reply by Joe Aldridge on
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The way I read your response is we should have known better. I don't think that is possible. There is "unknown RISK" involved. Especially, when a foreign group can price you into the basement. I've said before: the Feds should put a tariff on all imported oil to bring that price to $65 per bbl. It would be a way to stabilize the import market and protect the O&G industry. But that won't happen because the O&G industry has a stigma. They are a bunch of bad people that as you put are greedy.
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Permalink Reply by Paul Butler on
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The "Free Market" "Invisible Hand" Republicans wouldn't like it either, no matter how jingoistic the appeal.
Those folks don't like government intervention in the economy.
Are you a Democrat or a Socialist?
Bernie Sanders likes that kind of stuff!
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Permalink Reply by Joe Aldridge on
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I don't see where party has anything to do with it. We need a strong energy sector. The last I heard the O&G industry has lost 200,000 jobs. Those are everyday people that have lost their jobs because the Arabs can price us out of the market. And there is a ripple effect. The State of Louisiana is going to be a billion dollars short this year because of the plummet in O&G revenue and the ripple effects.
So you take the position of Obama and Clinton. More illegal immigration to hold down wages and more products coming in from foreign countries under the NAFTA.agreement to move jobs to foreign countries. My position is to protect Us and our energy sector - we Americans First. If it takes a protective tariff to accomplish that then DO IT.
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Permalink Reply by Paul Butler on
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I see---so you're a communist?
Query: did it ever occur to you that some Americans may be enjoying cheap gasoline?
Did it ever occur to you that the petrochemical/refining folks may be enjoying cheap feed stocks?
How will you convince those folks that what they need is a financial kick in the nuts?
I don't know Mr. Joe., it seems like it's going to be a hard sell.
How about this: that the present Oil & Gas folks stop giving the industry away to bankers and White Shoe Law Firms, that they grow from operating income instead of debt and tortured accounting to finance land grabs.
I'd like to see that.
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Permalink Reply by Joe Aldridge on
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I see you are a name caller. So sad that you can't discuss something without becoming emotional and degrading. I had hoped that you were factual and could see another persons views. Sorry to see that you can't.
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