Energy and Petroleum Industry Bankruptcy Wave Rolls On

Things continue to remain sparse in the oil and gas industry, and while public sentiment is almost inclined to cheer that development, the real victim of the industry downturn has been smaller oil and gas businesses across the country. While the industry’s financial hardships are expected to continue into the future, there’s hope on the horizon for the industry as a whole.

First, the bad news. In the last two months, several oil and gas companies have been forced to file for bankruptcy. At the end of April, Ultra Petroleum filed chapter 11, citing nearly $4 billion in debts. Last week, SandRidge Energy Inc and BreitBurn Energy Partners LP both filed for bankruptcy both listing debt of more than $3 billion. Even industry titan Linn Energy wasn’t immune, a debacle that (according to Forbes) could get real messy for the company’s investors. At present, nearly 70 energy and petroleum bankruptcy filings have been submitted in 2016.

Things in the industry have gotten so dire that Reuters has predicted that the bankruptcy wave could eventually rival the telecom bust of the early oughts. Some experts even predict that the upswell of filings will actually get worse in the second quarter of 2016. However, for the patient and frugal company, there is hope on the horizon.

Here is a fact of life: the world needs petroleum. And while the price per barrel is at a definite low today, the industry as a whole has already begun to brace for the rebound. One reason for this positivity is a simple economic principle: as oil prices decrease, people tend to celebrate the price change by buying a new car. This means they’ll need to buy some gas to fuel said car which, in turn, increases the demand for oil.

That’s one simple factor that will equate to increased oil prices in the future. The industry itself is weathering the storm by slowly tapering the number of barrels being produced. While this has temporarily led to lay-offs, as the demand for oil increases these positions are expected to return.

In other words, while times seem grim at the moment, every expert in the field is unanimous in their belief that this too shall pass and the energy and petroleum industry will rebound in the coming months.

Posted in Industry News.