Many companies on the teetering on the brink of insolvency find themselves buried under high interest rates and lack of deployable capital due to low commodity prices. Many banks have cut oil company credit lines as part of the semi-annual review by lenders. But the combined $8.9 billion in debt between the eighteen companies still looms ever menacingly in the background.
Crude oil production in June from the seven major US shale regions is expected to fall 113,000 b/d month-over-month to 4.85 million b/d. Gas production from the regions is forecast to fall 464 MMcfd.
Oil and gas producers depend largely on bank credit lines to run their businesses. Cmpanies getting ready to restructure are working closely with their bankers before filing for bankruptcy.
As the number of failed operators mounts, the surviving companies are laying the groundwork for what they forecast will be an era of slower but steadier growth in the state at the epicenter of the U.S.’s energy boom.
Including the assumption of CPG debt, the total enterprise value of the transaction is approximately $13 billion.
The pullout comes as crude oil prices have plummeted to less than half their June 2014 levels, forcing oil companies to slash spending. For Shell and ConocoPhillips, the decision to abandon Arctic acreage was formalized just before a May 1 due date to pay the U.S. government millions of dollars in rent to keep holdings in the Chukchi Sea north of Alaska.
The rout in crude prices is snowballing into one of the biggest avalanches in the history of corporate America, with 59 oil and gas companies now bankrupt after this week's filings for creditor protection by Midstates Petroleum MPOY.PK and Ultra Petroleum UPL.NL.
US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased 2.8 million bbl for the week ended Apr. 29 compared with the previous week. The US Energy Information Administration estimated a total of 543.4 million bbl, which is historically high for this time of year.
China’s falling oil output and sliding U.S. production may help rebalance a market struggling to recover from the worst price crash in a generation
American LNG will be part of the approach towards diversification of sources of gas in Europe, in contrast to projects like Nord Stream 2 or the revived South Stream, which she said are not real sources of diversification.
Halliburton’s chief executive has blamed an increasingly difficult US regulatory climate for the collapse of his company’s $28bn bid for rival Baker Hughes, which was abandoned on Sunday.
U.S. Rig Count is down 11 rigs from last week to 420, with oil rigs down 11 to 332, gas rigs down 1 to 87, and miscellaneous rigs up 1 to 1. Canadian Rig Count is down 3 rigs from last week to 37, with oil rigs down 2 to 10, gas rigs down 1 to 26, and miscellaneous rigs unchanged at 1.
“Expanding LNG exports will create American jobs, grow our economy, strengthen the global marketplace and bolster strategic alliances abroad. U.S. LNG exports not only provide international consumers with greater choice, but also help them break dependence on nations that use their energy resources as a diplomatic and political weapon.
Canada's National Energy Board (NEB) projects that both Canada's natural gas production and its domestic natural gas consumption will increase through the next decade. Exports of natural gas by pipeline to the United States are expected to continue to decline. The planned construction of liquefied natural gas (LNG) export terminals on Canada's western coast, which would send LNG exports to Asian markets by 2019, plays a key role in maintaining Canada's overall natural gas exports.
U.S. Rig Count is down 9 rigs from last week to 431, with oil rigs down 8 to 343, and gas rigs down 1 to 88. Canadian Rig Count remains unchanged at 40, with oil rigs up 2 to 12, and gas rigs down 3 to 27.