Oil Bankruptcies May Exceed Great Recession Levels
Sharon Edmondson, Washington Legislative Team Member | February 18, 2016
According to a report by Deloitte LLP, bankruptcies in the oil and gas industry this year could surpass levels seen in the Great Recession.
About 35 percent of listed pure-play companies, which focus only on exploration and production, are at high risk of facing bankruptcy worldwide. The 175 producers at risk saw their combined debt surge to about $150 billion, while cash flows dwindled. The wave of potential bankruptcies could be worse than during the downturn of the end of the last decade as funding shrinks and hedges unwind, reported John England, vice chairman and U.S. oil and gas sector leader for Deloitte.
Reducing production costs helped companies remain afloat last year. About 95 percent of U.S. producers have lowered production cost to less than $15 a barrel, compared with 65 percent in the second quarter of 2014, the study found.