US oil and gas producers are on track for their largest bankruptcies since the last shale downturn in 2016, according to a survey by the law firm Haynes and Boone. The survey found that 39 producers with combined debts of $51 billion filed for bankruptcy protection in the january-August period of 2020. The number of companies is still fewer than 70 in 2016, but these were mostly smaller firms with debts totalling to $56 billion.
Debt-laden producers were left without access to credit amid weak fuel demand caused by the coronavirus pandemic. The shale revolution led the US to become the top crude oil producer in the world. However, shale wells run dry quickly, and producers took on massive debt to keep drilling new wells. The output expansion in the industry contrasted investor returns. The downturn this year affected a number of companies which were once among the largest in the industry. Haynes and Boone also said that 37 oilfield service companies also filed for bankruptcy protection during the same period.
