• 2 minutes Rational analysis of CV19 from Harvard Medical School
  • 4 minutes While U.S. Pipelines Are Under Siege, China Streamlines Its Oil and Gas Network
  • 7 minutes Renewables Overtake Coal, But Lag Far Behind Oil And Natural Gas
  • 7 hours Tesla Begins Construction Of World’s Largest Energy Storage Facility
  • 5 hours Joe Biden the "Archie Bunker" of the left selects Kamala Harris for VP . . . . . . Does she help the campaign ?
  • 3 hours Will any journalist have the balls to ask Kamala if she supports Wall Street "Carried Interest" Tax Loophole
  • 1 day Trump Hands Putin Major Geopolitical Victory
  • 6 hours America Could Go Fully Electric Right Now
  • 11 mins Buying votes is cool now.
  • 1 day Those Nasty White People and Camping Racism
  • 5 hours In 1,267 days, Trump has made 20,055 false or misleading claims
  • 17 hours .
  • 14 hours The Truth about Chinese and Indian Engineering
  • 16 hours Brent above $45. Holding breath for $50??
  • 23 hours COVID&life and Vicious Circle: "Working From Home Is Not Panacea For Virus"
  • 16 hours The World is Facing a Solar Panel Waste Problem
  • 2 days Oil Tanker Runs Aground in Mauritius - Oil Spill
  • 2 days China wields coronavirus to nationalize American-owned carmaker

Largest California Oil Driller Files for Bankruptcy

California Resources, the largest oil driller in the state, has filed for Chapter 11 bankruptcy protection, becoming the latest casualty of an oil price crash that coincided with the coronavirus pandemic that wiped out as much as 20 million bpd of demand in April alone.

In a press release, the company said it had agreed a restructuring plan with most of its shareholders, which will see its debt pile significantly reduced, by about $5 billion, “enabling the Company to operate safely through the current downturn in commodity prices and establishing a solid financial foundation to enhance future value creation.”

The U.S. oil industry, especially shale, has been hit particularly hard by the crisis, with cash shortages and high debt levels reducing companies’ flexibility during the downturn.

During the second quarter of the year alone, more than 18 oil and gas companies in the United States filed for bankruptcy, according to data from Haynes and Boone. Since the start of the year, as many as 41 companies filed for bankruptcy.

Rystad Energy in April warned that as many as 530 U.S. oil companies could file for bankruptcy protection if oil had stayed at $20 per barrel. Prices have improved since then, but bankruptcies in the U.S. oil and gas sector are set to continue even at the current oil price of some $40 a barrel for West Texas Intermediate, according to analysts.

The problem is unsustainable debt levels that resulted in a record number of companies from the industry defaulting on interest payments on their junk-rated bonds last year, when prices were substantially higher. At the same time, banks have grown markedly cold to the industry as it has failed to deliver on production promises. Credit lines have been cut, leaving even less wiggle room for the most troubled in the field.

By Irina Slav for Oilprice.com

More Top Read From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

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