In response to declining oil prices, energy market analysts have suggested that the energy sector will see an influx of mergers, divestitures, and even bankruptcy among exploration and production (E&P) companies. In September 2015, banks will conduct one of their regular analyses of companies’ reserves to assess whether their current assets outweigh their outstanding debts. For oil and gas operators with debt that exceeds their asset bases, restructuring or bankruptcy could become necessary to bridge the financial gap.

1. Surge in Restructuring
and Bankruptcy Predicted
for Energy Sector

2. In response to declining oil prices, energy
market analysts have suggested that the
energy sector will see an influx of mergers,
divestitures, and even bankruptcy among
exploration and production (E&P) companies.

3. In September 2015, banks will conduct one of
their regular analyses of companies’ reserves
to assess whether their current assets outweigh
their outstanding debts. For oil and gas
operators with debt that exceeds their asset
bases, restructuring or bankruptcy could
become necessary to bridge the financial gap.

4. Due to low oil prices throughout 2015,
producers have drastically cut the number of
active rigs across the United States. In spite of
this, the U.S. Energy Information Administration
has reported that the country’s oil production
reached its highest level in over four decades in
March 2015, hitting 9.5 million barrels per day.

5. Market experts such as Kim Brady of SOLIC
Capital, a private equity firm, have predicted
that oil prices will continue to decline in the
midst of high production levels. Brady noted
that while the demand for oil is increasing along
with production, supply has begun to exceed
demand.

6. Predicting a continued decline in oil prices, he
has projected that as many as 13 publicly
traded E&P companies with revenue exceeding
$100 million will file for bankruptcy in the
following year, with between three and seven
additional bankruptcies occurring after June
2016.