Haynes and Boone: North American E&P bankruptcies on the rise

Bankruptcies filed by North American oil and gas producers are experiencing an uptick this year following a substantial decrease in 2017 and 2018, according to an Aug. 12 report by Haynes and Boone.

190816 Haynes Boone Bankruptcy Chart
Haynes and Boone

Bankruptcies filed by North American oil and gas producers are experiencing an uptick this year following a substantial decrease in 2017 and 2018, according to an Aug. 12 report by Haynes and Boone. The firm has monitored the number of North American oil and gas producer bankruptcies since 2015.

The initial wave of bankruptcies in 2015-16 consisted of more than 100 bankruptcy filings. That number decreased during 2017-18 with 24 bankruptcy filings in 2017 and 28 in 2018. So far this year, however, the number has been rising. There have been 26 bankruptcies filed as of Aug. 12, with 20 filings since the beginning of May when H&B last reported its findings.

Over the entire period, 192 producers have filed for bankruptcy since the firm began tabulating E&P filings, involving some $106.8 billion in aggregate debt.

During 2015-19, Texas has seen the largest number of filings with 87; followed by Canada, 18; and Colorado, 10.

Natural gas and natural gas liquids prices continue to be cited as a main contributor to the filings, and since the beginning of this year, said Haynes and Boone, “Oil has been range-bound in the $50s[/bbl] without any clear indication that prices are heading north anytime soon.”

As for what’s next, the firm said that it’s too early to predict, but “it is clear that for certain financially troubled producers wounded by the crash in 2015, some stakeholders may have given up hope that resurgent commodity prices will bail everyone out.” It added, “For these producers the game clock has run out of time to keep playing ‘kick the can’ with their creditors and other stakeholders.”

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