More than 240 U.S. oil and gas companies may be forced to file for bankruptcy protection during the next two years if oil prices remain low, a new report says.
Some 73 energy companies might have to file for Chapter 11 bankruptcy this year with the price of crude hovering around $30 a barrel. If prices remain low, another 170 companies are expected to follow in 2021, according to Rystad Energy, a Norwegian energy research firm.
If Rystad’s forecast holds true, the number of energy bankruptcies from the coronavirus-driven oil crash will eclipse that of the last bust, which claimed some 200 companies. Several energy companies have recently filed for bankruptcy, including Whiting Petroleum, Skylar Exploration, Diamond Offshore, Freedom Oil and Gas and Gavilan Resources. The coronavirus pandemic, which has forced businesses to temporarily close and consumers to stay home, has crushed demand for oil and gas products, causing prices to plummet.
“The Covid-19 pandemic and the price crisis it has brought upon the oil and gas sector have hit the profitability of exploration and production (E&P) companies hard,” the Rystad report states. “Despite the recent relative oil price recovery, dozens of U.S. operators are still threatened by bankruptcies even at a West Texas Intermediate oil price of $30 per barrel.”
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