• TriStone Holdings Ltd.

The 2016 Bankruptcy Mayhem in the Oil Patch.


TOTAL DEBT OF NEWLY BANKRUPTED ENERGY COMPANIES SOARING EACH MONTH DURING 2016.


Most investors are aware that there is significant carnage in the oil patch. Low energy prices caught over-leveraged companies off guard, and it’s forced many of these companies to seek protection from their creditors through bankruptcy.


However, the pace of new bankruptcies is accelerating fast, and now bigger companies are being affected. This week’s chart shows that the 11 new bankruptcies in April 2016 carry a substantial debt load of nearly $15 billion – most of which is unsecured.


A quick look at the data, which we pulled from Haynes and Boone, LLP, tells the tale:

In the first two months of 2016, there were nine bankruptcies. Not one of the companies filing had debts that exceeded $200 million.


In March, there were a total of seven new bankruptcies, including Venoco Inc. Venoco is a private company that is heavily oil-weighted with assets located offshore and onshore in Southern California. Venoco’s filing listed that it had $1.28 billion in debts, 71% of which are unsecured.


Meanwhile, April was the biggest month for oil patch bankruptcies in the last two years. A total of 11 companies filed, but even more meaningful to investors is that four of the bankruptcies were public companies with debts exceeding $1 billion.


Pacific Energy, formerly Pacific Rubiales, used to be the largest operating oil company in South America. Now, however, the company is in the midst of undergoing dramatic restructuring. Common shares have been delisted and the company is also seeking to get extensions on its $5 billion of unsecured debt.


Texas-based Ultra Petroleum, which has nearly $4 billion in unsecured debt, has dropped from the NYSE to the OTC as it too seeks protection. The stock’s 52 week high was $17, but it now shares are trading for mere pennies.


Two other big companies to go to court were Energy XII and Midstates Petroleum. They each owe roughly $3 billion and $2 billion of total debt, respectively. Energy XII operates 10 of the largest oilfields on the Gulf of Mexico Shelf, while Oklahoma-based Midstates is focused on the application of modern drilling and completion techniques in oil and liquids-rich basins in the onshore U.S.


The grand total of debt for all April bankruptcy filers was an astounding $14.9 billion, most of which is unsecured. For reference, the 42 energy companies that filed for bankruptcy in all of 2015 had a combined $17.2 billion in debt.


None of the material displayed on this website constitutes or shall be deemed to constitute advice on investing or an invitation to invest or otherwise deal in any investment via TriStone Holdings. The value of investments can go down as well as up. Actual financial returns can be considerably different from any returns anticipated and may be lower than the original investment. If you are an investor or a potential investor and you have any queries relating to any matter contained in this website you should seek advice from an independent financial adviser who will no doubt also confirm that past performance is not necessarily an indicator of future performance.


TriStone Holdings Limited

A Firm of Distinction.


#venture_equityltd #success #customerservice #professionalism #growth #positivity #dedication #stockmarket #investment #equities #principals #commitment #discipline #consistency #foundation #expertise #service #clientcare #decisions #choice #ambition #drive #focus #success #fixed #income #capital #freedom #diversity #energy #oil #kansas #osage #IPO #Tristoneholdings #diversity #heritage #decisive #team #success #frack #seismic #geology #commodities

54 views