Oil bust took a high toll in North America

Law firm reports 335 energy companies went into bankruptcy court over the past three years, including 11 so far in 2018

In late 2016, when OPEC and its allies agreed to slash oil production to support crude prices, executives and analysts hailed it as a victory for resilient U.S. shale drillers, whose good old American ingenuity and engineering outlasted once-powerful Middle East rivals in a global oil war.

And indeed, as oil prices climb above $65 a barrel, no segment of the oil industry has benefited more than companies in the United States, where surging crude production could soon eclipse Saudi Arabia and Russia — an unthinkable turn of events only a few years ago.

But American energy companies hardly came out of the fracas unscathed. Haynes & Boone, a Dallas law firm that has tracked energy bankruptcies since early 2015, reported this week that 335 oil producers, energy service companies and pipeline operators in the United States and Canada have filed into bankruptcy court over the past three years.

That casualty list includes 11 bankruptcy cases in the first three months of 2018, a sign that even though the oil industry has made strides to recover from the downturn — sending an armada of rigs to fields in West Texas and Oklahoma — some debt-laden companies are still struggling to make ends meet.

Energy companies ran up $500 billion dollars in debt to fuel the oil boom that lasted from 2010 to mid-2014. North American companies took about $170 billion of that debt with them into bankruptcy court, according to Haynes & Boone.

The oil industry’s 2018 bankruptcy cases include six oil and gas producers, four service companies and one pipeline firm, with $9.5 billion in debt all together.

U.S. oil companies cut 178,000 jobs during the downturn, according to Houston transaction adviser Graves & Co. In Canada, companies cut 44,000 jobs and worldwide, 440,000. Graves says that’s a conservative estimate.

But the industry is now sending more oil rigs and investing billions to extract oil and gas from the Permian Basin in West Texas and in other U.S. shale plays.

On Friday, Houston oil field services firm Baker Hughes reported the number of working U.S. drilling rigs rose by five this past week, led by gains in Texas and the Gulf of Mexico. U.S. oil prices rose 32 cents on Friday to settle at $67.39 a barrel in New York.