• 5 minutes Desperate Call or... Erdogan Says Turkey Will Boycott U.S. Electronics
  • 11 minutes Don't Expect Too Much: Despite a Soaring Economy, America's Annual Pay Increase Isn't Budging
  • 15 minutes WTI @ 67.50, charts show $62.50 next
  • 6 hours The EU Loses The Principles On Which It Was Built
  • 16 mins Starvation, horror in Venezuela
  • 2 hours Saudi Fund Wants to Take Tesla Private?
  • 15 hours Crude Price going to $62.50
  • 1 hour Why hydrogen economics does not work
  • 4 hours Again Google: Brazil May Probe Google Over Its Cell Phone System
  • 11 hours WSJ *still* refuses to acknowledge U.S. Shale Oil industry's horrible economics and debts
  • 1 day Anyone Worried About the Lira Dragging EVERYTHING Else Down?
  • 1 day Chinese EV Startup Nio Files for $1.8 billion IPO
  • 1 day Oil prices---Tug of War: Sanctions vs. Trade War
  • 1 day Correlation does not equal causation, but they do tend to tango on occasion
  • 1 day Russia retaliate: Our Response to U.S. Sanctions Will Be Precise And Painful
  • 10 hours Saudi Arabia Cuts Diplomatic Ties with Canada
Why Saudi Arabia Cut July Oil Production

Why Saudi Arabia Cut July Oil Production

Saudi Arabia’s oil production in…

A Major Setback Looms For Colorado Shale

A Major Setback Looms For Colorado Shale

November elections in Colorado are…

Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

More Info

Higher Oil Prices Reduce North American Oil Bankruptcies

Oil

Higher oil prices are letting North American oil and gas companies dodge bankruptcy announcements, according to an analysis conducted by the Dallas-based law firm Haynes and Boone.  

This year, only 20 companies on the continent have declared bankruptcy—there were three times more than that last year.

So far, the oil price crash of 2014 has caused 134 oil exploration and production companies to go under so far, but prices have risen above $60 a barrel this year, buying some underperforming companies times to shape up.

Oil field services companies still face the brunt of the price bust, with 43 of them declaring bankruptcy this year. Still, that’s an improvement from 71 bankruptcies last year.

Haynes and Boone says 310 oil producers, oil field services companies, and midstream firms have gone under since the top of 2015, just months after the initial crash.

North American shale oil and gas companies have proven that they can adapt their business model through the lower crude oil prices cycle. Now, American shale producers might have to adjust their financial strategy when the Federal Reserve (Fed) raises interest rates.

U.S. shale oil production has increased multifold to 4.25 million bpd in 2016. The rapid growth in nonconventional production methods (fracking) bloated soon after U.S. interest rates tumbled to record lows—making money very cheap and readily available to be pumped into any projects returning figures higher than the depressed cost of borrowing, even with oil prices trading below $60 per barrel since July 2015.

The cost of doing oil business is poised to rise along with the Fed’s inevitable campaign toward ‘rate normalization’ in the world’s largest economy, as it continues to show signs of growth following its rising inflation figures.

By Zainab Calcuttawala for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News