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Low oil prices may cause US financial restructurings

http://www.chemnet.com   Oct 01,2015 Platts
Low oil prices may cause US financial restructurings

  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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