BANKRUPTCY PROTECTION - Experts say to expect more bankruptcies in the oil and gas industry over the coming months. The coronavirus pandemic and a global oversupply of oil continues to keep prices low. So low that companies are reporting billions in losses, slashing budgets, and laying off workers. Charlie Beckham specializes in oil and gas bankruptcies at the Texas law firm Haynes and Boone located in Houston. He says companies may not be making enough money to pay off their debt.
"And filing Chapter 11 allows them to at least put on hold the payment of some of those obligations," Beckham explained, "such as interest and trade creditors debt, while they try to rearrange their balance sheets and right size their balance sheet.”
Beckham says when companies took on that debt they expected oil to reach $70 dollars a barrel or more. Instead, prices are at historic lows, even going negative one day last month. Most oil producers say they need oil prices to be around $37 a barrel just to break even. Today’s price of West Texas Intermediate is hovering close to $26 dollars a barrel.
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