Bankruptcy filings plunge in oil industry

Bankruptcy filings by crude producers decreased sharply in first half of year

The number of North American oil producers shuffling into bankruptcy court has fallen dramatically this year, a new report shows.

The number of North American oil companies shuffling into bankruptcy court has fallen dramatically this year, a new report shows.

Fourteen oil producers filed for Chapter 11 bankruptcy protection in the first half of the year, down from 50 in the first six months of 2016, according to Dallas law firm Haynes & Boone.

The cases filed this year, including Colorado oil explorer King’s Peak Energy, Canada’s Rooster Energy and Houstonbased Vanguard Natural Resources, involved a combined $5.1 billion in debt. All told, 128 U.S. and Canadian oil producers have carried some $79.3 billion in debt into bankruptcy court since 2015.

“Many companies that needed to restructure either have gone through bankruptcy or reached out-of-court settlements with creditors,” Ian Peck, a partner at Haynes & Boone, said in a statement.

Industry conditions are much improved from 2016, when the long slide in prices hit bottom at just over $26 a barrel, the lowest in more than a decade. Prices bounced back to as high as $54 barrel earlier this year but have since slipped. Oil settled at $48.59 a barrel Thursday in New York.

It appears oil producers have adjusted to prices hovering between $45 and $55 a barrel, Peck said, but that resiliency may not last forever. He added that bankruptcy cases may increase again in coming months.

“Despite the industry’s new stability at this price point, a prolonged pricing trough may ultimately be too difficult for some players to bear,” Peck said.

Some companies, he said, may have to go through bankruptcy proceedings a second time.

Meanwhile, 32 oil field services companies have filed bankruptcy papers this year, down from 39 in the first half of 2016. The cases filed this year involved $16.4 billion in debt.

It appears oil producers have adjusted to prices hovering between $45 and $55 a barrel.