ChemNet News
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Low oil prices may cause US financial restructurings
http://www.chemnet.com Oct 01,2015 Platts
US oil and gas companies' balance sheets have suffered mounting distress from nine months of oil prices that are less than half mid-2014 levels, with smaller operators the hardest-hit and many inching toward or already seeing defaults on debt and liquidity downgrades.
Comments from bankruptcy and financial turnaround specialists are echoing silent-screen star Al Jolson's famous line when motion pictures began adding sound nearly 100 years ago: "You ain't seen nothin' yet."
Analysts say oil and gas corporate financial restructurings are likely to multiply among smaller operators that were able to easily borrow money in a $90-plus/b oil environment, but which at current crude prices around $45/b are being squeezed and must rely on higher-priced funding sources.
"We're looking right now at a default rate that is twice what it normally would be," Marc Schwartz, principal of financial restructuring specialists HSSK, said. "My concern is that it will be very widespread."
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