As the impact of the COVID-19 pandemic accelerates through all the segments of the shale patch, experts foresee the upstream sector to continue to be hit with an inevitable wave of bankruptcies.
Through the first five months of 2020 alone, 18 U.S. E&P firms have filed for bankruptcy protection, according to Haynes and Boone’s Oil Patch Bankruptcy Monitor report. That number doesn’t include the filings of Extraction Oil & Gas Inc. and, more recently, fracking pioneer Chesapeake Energy Corp., which became the largest oil and gas company to enter bankruptcy so far during the coronavirus pandemic-driven downturn.
“During the first half of the year, the majority of bankruptcy filings have come from companies that had financial issues and unattractive assets pre-pandemic. … However, during the second half of the year, we are going to see a significant increase in bankruptcies from companies that weren’t as challenged last year but are suffering financial distress due to the current market conditions,” Brian Williams, partner at investment bank Carl Marks Advisors, told Hart Energy.