Two more oil companies have filed for Chapter 11 bankruptcy protection, as crude oil prices hover just above $45 per barrel and financial woes take their toll.
Oklahoma-based Midstates Petroleum Company and Texas based Ultra Petroleum have now filed for bankruptcy, citing combined debts of more than US$5.8 billion blamed on a long run of low commodity prices that have led to irreparable financial damage.
Last year, Midstates Petroleum recorded a net loss of $1.8 billion, compared to net income of $116.92 million a year ago. The company operates in Texas, Louisiana and Oklahoma and produced 12 million barrels of oil equivalent in 2015. It owns assets worth around $680 million. According to the company, it reached a plan support agreement with a majority of its lenders for restructuring.
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As for Ultra Petroleum, the company had disclosed that it has a debt of nearly $4 billion against $1.3 billion in assets filed with the bankruptcy court. The company's main assets include gas-producing properties in Wyoming, as well as some assets in Pennsylvania and crude oil properties in Utah.
Since early last year, some 70 North American oil and gas companies have filed for bankruptcy. The numbers aren't stark: They only account for about 1 percent of U.S. output, but there are fears the trend could pick up pace.
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According to a recent Deloitte analysis, which examined 500 oil and natural gas exploration and production companies worldwide, 175 of the companies (or around 35 percent) were at high risk of going bankrupt. Together, these companies have more than $150 billion in debt. The report added that the situation is "precarious" for 50 of these companies due to negative equity or leverage ratio above 100.
By Charles Kennedy of Oilprice.com
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