October 18, 2021

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Another Shale Producer Files for Bankruptcy

Shale Bankruptcy

Eagle Ford Producer Lonestar Resources Filed for bankruptcy Defense under Chapter 11 this week has become the latest risk of bankruptcy in the U.S. shale patch this year.

Lonestar Resources has filed under Chapter 11 in the United States Bankruptcy Court for the Southern District of Texas, with a growing number of U.S. oil and gas producers – from small players to giants – suffering from non-performing loans with oil prices. .

This week, Oasis Petroleum Inc. also Filed It is expected to reduce its debt to US $ 1.8 billion for the voluntary Chapter 11 process aimed at restructuring. The company said Oasis Petroleum has sufficient liquidity to operate and expects to exit the restructuring process in November 2020 subject to court approval.

Dozens of shale manufacturers have filed for bankruptcy protection this year, with Chapter 11 filing accelerating after oil prices collapsed in March, and U.S. shale producers cut production in the following months.

Notable bankruptcy lawsuits include Permian producer Rosehill Resources, California Resources and Denbury Resources. Shale giant Chesapeake Energy also filed for bankruptcy in late June.

As of Aug. 31, a total of 13 producers filed for defense in July and August, according to data from law firm Haynes & Boone, indicating a 62 percent increase this year, including the rest of the filings.

“This is not the level of filing in 2016, but a disturbing trend. The total secured debt that has so far caused the 2020 producer bankruptcy has already exceeded the total debt that all the producer filed in 2016,” Haynes & Boone said.

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“Until full economic activity returns and consumer confidence that the worst of the epidemic is behind us, demand levels will continue to depreciate.” Longer or lower “remains a code word for producers and their creditors,” the law firm said.

By Josh Owens for OilPrice.com

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