Since the black swan events of the Russian-Saudi supply conflict and COVID-19 collided in early March, the past six months have plummeted oil producers to unforeseen places, according to a Forbes commentary. One of those places is bankruptcy court; and boy has it been busy over the past six months. With the announcement of offshore producer Arena Energy’s bankruptcy late last week the count of North American bankruptcy filings for producers stood at 36 (31 of those have been in the second and third quarter so far this year). In terms of aggregate debt, the industry is near $53 billion for 2020 so far. That puts the upstream segment on the precipice of having the most debt dollars exposed to bankruptcy protection in U.S. history and we still have four months to go. Some industry insiders are hearing that around 60-70 additional producers may file before year-end, meaning that a wave of companies are on this precipice. If that is the case, then chapter 11 records will be left in the dust very shortly, according to the commentary. That appears to be a monumental shift for six months of depressed prices, but it is important to remember that at around $50 per barrel (where oil had been most of the year prior) some upstream producers are barely breaking even. So when prices dropped even 15-20 percent, there wasn’t much margin left to work with.
