slumping oil prices

Bankruptcy Filings in the Oil Patch Trickling in, Experts Expect More to Come

By On March 22, 2015 6:12 pm

By: Rick Stouffer, Senior Energy Editor, Shale Energy Business Briefing

What was unthinkable one year ago suddenly has burst upon the US oil and gas industry scene with even more speed than the plunge in crude oil prices.

US Bankruptcy Court has become the Defense du Jour against price plunge, as overleveraged producers and service providers come to the edge of the cash flow cliff and decide the only way to survive creditors and loan covenants is court protection.

“Once it becomes apparent that they can’t grow without violating covenants – that is, because most exploration and production companies tend to borrow to drill new wells [i.e., grow], if you can’t borrow another penny, you generally can’t grow,” Mark Hansen, an Energy Analyst in Chicago with Morningstar, told Shale Energy Business Briefing (SEBB).

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