Since the beginning of 2015 more than 100 oil and gas companies have filed for bankruptcy. To put these bankruptcies in context, the number of oil and gas bankruptcy filings is on par with the dot-com bust of the early 2000s. The increase is due to overzealous lending and a sustained crash in the price of oil.
Many banks gave loans to companies with the assumption that oil prices would hover around $100/barrel. Since late 2014, oil prices have hovered below $50/barrel. Consequently, with sustained lower oil prices, companies cannot produce enough oil to payoff their debts.
Haynes-Boone, a law firm out of Houston, has been tracking the debts from all of the oil and gas bankruptcy filings. In total, the firm has found that cumulatively all of the 2015-16 oil and gas bankruptcy filings amount to $67.9 Billion in unsecured and secured debts. This is a lot of money, which will likely have national impacts.
What Does Oil and Gas Bankruptcy Increase Mean For WORC Region?
The large number of bankruptcy filings in our region, which account for thousands of wells, is alarming to say the least. The bankruptcy filings foreshadow a possible reclamation crisis, if companies cannot properly work out details in bankruptcy. Please note that companies that have filed for bankruptcy can still operate, so don’t expect any companies to leave overnight.
In the WORC region, Colorado, Montana, North Dakota, and Wyoming are affected by bankruptcy filings. Some high profile companies that have filed in the region include:
- Samson Resources
- Emerald Oil
- Linn Energy
- Ultra Resources
Of these companies, Samson operates in the most states in our region: Colorado, Montana, North Dakota, and Wyoming. And Ultra Resources has the highest number of wells impacted by its bankruptcy filing, specifically more than 3,000 in Wyoming.
So what can we do about this looming problem? The answer at the moment is to continue to track when new companies file for bankruptcy. In addition, we must also track the court proceedings to ensure that there are not looming reclamation disasters on the horizon. This is also a time to campaign for improved bonding and reclamation standards to ensure reclamation occurs without costing taxpayers.
Read more stories about oil and gas here.
Read more:
Colorado Oil and Gas Activists Hopeful, Despite Ballot Defeat
Fracking Cover-Up Continues Groundwater Contamination Disaster in Pavillion, Wyoming
WORC Files Injunction to Stop Secret Royalty Policy Committee Meetings