Recently, the Deloitte Center for Energy Solutions released a study entitled “The crude downturn for exploration and production companies” addressing the financial health of pure-play exploration and production companies (E&P). The study offers an analysis of companies’ behavior to the current oil price crisis and their responses to bankruptcy. The study excluded integrated oil major and national oil companies from its analysis.
According to the study, during times of financial stress, companies either file for bankruptcy, borrow money, enter into joint ventures, allow financial adjustment, or optimize their costs. As part of the analysis, the study finds that 35 E&P companies have filed for bankruptcy in the United States between July 1, 2014 and December 31, 2015, but a majority of them have submitted restructuring plans that have been approved by lenders. In the meantime, it is stated that E&P companies have saved $130 billion and significantly reduced their production costs despite the oil price crisis.
In a media report, Andrew Slaughter, Executive Director for the Center, declared that “each company has its own set of unique factors to consider . . . staying solvent will require the same level of perseverance, innovative thinking and creativity as the technology breakthroughs that led to the boom in supply we have seen over recent years.”
Writing by Chloe Marie - Research Fellow