U.S. energy bankruptcy surge continues on credit, oil-price squeeze

FILE PHOTO: A pump jack operates in front of a drilling rig at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford/File Photo

(Reuters) - Another 16 U.S. energy firms filed for protection from creditors last month, reflecting crude oil prices below levels that are profitable for many companies, according to a report by law firm Haynes and Boone on Tuesday.

More than 50 oil and gas firms have filed for bankruptcy since oil prices crashed in March, led by exploration and production companies with 29 filings. The amount of debt held by these companies, $49.69 billion, is nearly twice the debt held by energy bankruptcy filers all of last year, the law firm’s data showed.

Oil prices have fallen by about a third from above $60 a barrel at the start of the year as the COVID-19 pandemic crushed fuel demand. They briefly turned negative in April.

Energy companies this year rushed to slash spending by laying off workers, paring executive salaries and scaling back drilling, but oil producers posted large losses in the second quarter.

“This latest downturn not only affects smaller recently hatched shale producers, but July saw two of the largest filings involve well-established oil companies,” lawyers wrote in a note.

Last month, oil and gas producers California Resources Corporation and Denbury Resources both filed for Chapter 11. Together, those firms combined account for $7.7 billion in debt.

Shale gas giant Chesapeake Energy also filed for Chapter 11 in June, listing $9.17 billion in debt.

Some 21 oilfield service firms have filed for bankruptcy since the start of the downturn. In July, according to the report, filers included driller Noble Corporation and fracking companies BJ Services and Calfrac Well Services. Hi-Crush, a fracking sand supplier, also filed for Chapter 11.

Only one energy pipeline and logistics firm has filed for bankruptcy since the downturn began, but the law firm warned that “a number of midstream companies may need to seek protection” this year.