Bankruptcies in the North American energy sector piled up in the July-September quarter of 2020, law firm Haynes and Boone said. During the period, 17 oil producers filed for bankruptcy protection, resulting in a 21% year-on-year jump in such filings in the January-September period of this year. These companies struggled with low fuel demand amid the COVID-19 pandemic, weak oil prices, and lack of credit availability.
With upstream producers slashing capital expenditure, exploration and drilling activities were scaled back or even halted. As a result, oilfield service providers felt an even more severe impact. In the third quarter, 26 oilfield service providers submitted bankruptcy filings, compared to 11 a year earlier, Haynes and Boone’s report showed.
Midstream operators have been shielded from the recent oil crash. However, more of them are expected to approach bankruptcy court in the fourth quarter of 2020 as upstream producers try to avoid onerous contracts. In the third quarter, only one North American midstream company filed for Chapter 11 bankruptcy, Haynes and Boone said.
