Five companies default in Jan-Feb brings total bankrupt E&Ps to 119

Five oil and gas companies have gone bankrupt in the first two months of this year, according to the most recent edition of Haynes and Boone’s Oil Patch Bankruptcy Monitor. Currently 119 E&P companies have entered bankruptcy since the beginning of 2015.

The pace of bankruptcies seems to have slowed in recent months, as higher commodity prices give some relief. April and May 2016 have been the worst months for E&P companies, when a total of 28 companies entered bankruptcy. An average of 4.75 companies entered bankruptcy each month in 2015 and 2016, meaning that the five in January and February of 2017 is below average for such a period.

E&P Bankruptcies Tapering Off in 2017

According to Haynes and Boone, the five companies that went bankrupt have defaulted on a total of $5.5 billion in debt. Since 2015 debt defaulted on in E&P bankruptcies has amounted to $79.7 billion. By debt the largest company to go bankrupt in this downturn is Sandridge Energy, which defaulted on $8.3 billion.

Service companies defaults slightly down

The story is different for service companies, though, which have not seen much of a decrease in bankruptcy rates. A total of 118 service companies have gone bankrupt since January 2015, with seven going under in 2017. While seven companies going bankrupt in two months is below the average for that period of nine, it is less of a notable difference than seen in E&P companies. Unlike E&P companies, service companies have gone bankrupt at a relatively steady rate through the last two years, with no single month markedly worse than others.

E&P Bankruptcies Tapering Off in 2017

The service companies that have gone bankrupt are on average smaller than the E&P companies that have gone under. While nearly the same numbers of companies have defaulted, service companies have defaulted on a combined $20.6 billion in debt, as opposed to the $79.7 billion from E&Ps.

The largest service company to go bankrupt is Vantage drilling, which defaulted on $2.8 billion in debt. Nine E&P companies have defaulted on larger debts since 2015. By contrast, the smallest company to enter bankruptcy was a service company called A-K Supply Company, which defaulted on just under $125,000 in debt.

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