US shale producers, as well as refiners and pipeline companies, struggle under heavy debt loads. Due to the coronavirus pandemic, fuel demand has tumbled roughly 30 percent worldwide. The health crisis worsened Russia-Saudi Arabia price war. Markets flooded with crude.
The energy industry was already struggling to satisfy unhappy investors with weak returns even though the US in the last few years surged to become the world’s largest oil producer.
Oil giant Occidental Petroleum Corp and other companies that used debt to fund acquisitions before prices crashed are focusing on placating shareholders and preserving cash.
While large banks are preparing to become owners of oil and gas fields as they seize energy assets, numerous midstream companies backed by private equity are in danger of bankruptcy. Salt Creek Midstream had already hired law firm Kirkland & Ellis and Jefferies Financial Group for debt advice. The midstream company operates in the Delaware basin in Texas.
In coming weeks, more shale producers are expected to seek bankruptcy protection following Whiting Petroleum. Earlier this month, such steps announced by the company. Chesapeake Energy Corp and many small and mid-sized producers have retained debt advisers.
