Menu

Winners and Losers of the Oil Bust

Many driller companies and other business with ties to the oil and gas industry are feeling the pinch of low oil prices. Banks such as Wells Fargo & Co., Bank of America, Citigroup Inc. and JPMorgan Chase & Co. have set aside $2.5 billon combined to cover energy sector (oil and gas related) loan losses. These banks are prepared to increase that dollar amount if needed.

In 2015, 42 U.S. energy companies went bankrupt owing more than $17 billon. Dune Energy Inc. was one of these companies. They owed $144.2 million, their assets sold for $20 million. American Eagle Energy Corp. had debts of $215 million and their properties sold for $45 million this past October. BPZ Resources Inc. owed $275.2 million their assets sold for about $9 million. Endeavour International Corp. went bankrupt, they owed $1.63 billon, and they sold some assets for $9.65 million and gave the rest of their assets to lenders.

ERG Resources LLC owns about 19,000 acres in an oil field that was discovered in 1908 and it has produced 300 million barrels of crude since then. ERG was planning to extract more oil from this aging field then oil prices declined and ERG declared bankruptcy in April of 2015 owing about $400 million. They found no qualified buyer willing to pay its minimum bid of $250 million.

There will be more companies that follow suit; this past September (2015) Samson Resources Corp filed for bankruptcy listing $4.2 billion in debt. With bankruptcies increasing and more liquidations coming to market, bargain hunters will not pay top dollar, with so many deals to be found. These deals will create some big winners, such as, White Marlin Oil & gas Co. They have picked up assets, auctioned off at deep discounts. 

Source: Paul Thares, South Dakota State University 

Recent News

The 2020 Outlook for U.S. Agriculture From USDA’s Chief Economist
2/25/2020

Speaking on Thursday at USDA’s Agricultural Outlook Forum in Arlington, Virginia, USDA Chief Economist Robert C. Johansson provided a broad outlook for U.S. agriculture.  Today’s update provides an overview of key aspects of Dr. Johansson’s presentation. In his speech Thursday (transcript / slides), Dr. Johansson noted that, “Despite mixed signals heading into 2020, there has been important progress on the trade policy […]

Corn Prices-Farmer Holding and the Coronavirus
2/25/2020

Old crop corn basis and futures spreads continue to signal a smaller crop scenario than the price levels in the futures market suggest.  Futures price levels reflect the uncertainty associated with the coronavirus and the potential weaker growth its continuation promises.  Producer grain holding remains the popular explanation for a strong basis and small futures […]

Highlights from USDA Trade and Commodity Outlook Reports
2/24/2020

Following this month’s release of the USDA’s Long-Term Projections, on Thursday, the Department released its quarterly Outlook for U.S. Agricultural Trade.  This update provided an overview of agricultural trade based on the 2020 fiscal year, which began in October, months before the U.S. and China signed the Phase-One trade agreement.  Recall that Phase One farm purchase commitments are based […]

Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now