American oil and gas companies have gone heavily into debt during the energy boom, increasing their borrowings by 55 percent since 2010, to almost $200 billion, the Wall Street Journal reported today. Their need to service that debt helps explain why U.S. producers plan to continue pumping oil even as crude trades for less than $50 a barrel, down 55 percent since last June. But signs of strain are building in the oil patch, where revenue growth hasn’t kept pace with borrowing. On Sunday, a private company that drills in Texas, WBH Energy LP, and its partners, filed for bankruptcy protection, saying a lender refused to advance more money and citing debt of between $10 million and $50 million. Energy analysts warn defaults could be coming. “The group is not positioned for this downturn,” said Daniel Katzenberg, an analyst at Robert W. Baird & Co. “There are too many ugly balance sheets.” (Subscription required.)
http://www.wsj.com/articles/deep-debt-keeps-oil-firms-pumping-142059443…
For further analysis of oil and gas company bankruptcy, make sure to pick up a copy of When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy available in the ABI Bookstore.