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Oil & Gas Bankruptcies Likely to Increase

by Elizabeth Alford on July 16, 2015

For many seasoned oilmen, the downturn has been a wake up call and an opportunity for producers to take a hard look at their systems, processes, personnel, technology and strategies outside of the frenetic pace the boom required.

Read more:  Oil Bust Brings Opportunities

For others, the opportunity never materialized and the cracks are beginning to show.  The latest casualty is Sabine Oil & Gas Corp. who became the largest U.S. oil producer to file for Chapter 11 bankruptcy protection this week. In a news release, Sabine said its decisions were due to the significant impact of the recent and dramatic decline in oil prices, the continued low prices of natural gas, and general uncertainty in the energy market.

Sabine  joins five other producers who have filed bankruptcy since the first the year; American Eagle Energy, Quicksilver Resources, BPZ Resources, WBH Energy and Walter Energy. Analysts are warning that this is just the tip of the iceberg and many are forecasting bankruptcies will increase later in the year.

Kim Brady, with SOLIC Capital, told CNBC that “he expects between five and 13 publicly traded, independent oil and gas exploration and production companies with revenues in excess of $100 million to file for bankruptcy between July this year and June of next year. In the following year, he predicts another three to seven bankruptcies.”

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