Haynes and Boone also noted that of the eight E&P bankruptcies in the first quarter, half were filed in Texas. (Source: Hart Energy; Shutterstock.com)
First-quarter 2021 bankruptcy data served up by Texas-based law firm Haynes and Boone LLP offers a kind of Rorschach test to contemplate: more companies declared insolvency than last quarter, but carried less debt.
Overall, though, bankers and lawyers believe fewer upstream producers in North America will need to reshuffle finances this year.
After a 2020 plagued by 46 companies seeking bankruptcy protection for more than $53 billion in debt, eight E&P companies filed for Chapter 11 in first-quarter 2021, according to a newly released report by Haynes and Boone. The bankruptcy tally for the first quarter, half of which were filed in Texas, was a small uptick after fourth-quarter 2020 saw six new bankruptcy filings by E&Ps.
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This year still brought in the highest tally of filers in a first quarter since 2016, Haynes and Boone said. In 2016, 17 bankruptcies were filed by E&P companies within the first three months of the year.
Upstream debtors so far in 2021, however, brought less red ink to courthouses—when compared to similar time frames, including first-quarter 2020 when the pandemic began to upend the world. Compared to past first quarters, bankruptcy filings by oil and gas producers in 2021, with $1.8 billion in aggregate, was the second lowest first-quarter total after 2019’s $1.6 billion.
In a sign of possible attrition, Haynes and Boone said that no oil and gas producers filed billion-dollar bankruptcies in the first quarter, which hasn’t happened since third-quarter 2018.
By comparison, in 2020, 14 companies brought at least $1 billion in debt to the courthouse and Chesapeake Energy Corp., Ultra Petroleum Corp. and Unit Corp. each filed protection from creditors with over more than $5 billion in aggregate debt. Notable, Ultra’s bankruptcy was its second in the past five years.
First-quarter 2021 Upstream Bankruptcy Filings |
||
| Filing Date | Operator | Total |
| 2/26/21 | Castex Energy 2005 Holdco LLC | $205,749,481 |
| 3/5/21 | JVA Operating Co. Inc. | $3,224,568 |
| 3/9/21 | Sundance Energy Inc. | $430,157,000 |
| 3/14/21 | Highpoint Resources Corp. | $905,000,000 |
| 3/15/21 | Nine Point Energy Holdings Inc. | $281,797,867 |
| 3/24/21 | Rawhide Resources LLC | N/A |
| 3/24/21 | Justice Oil & Gas LLC | N/A |
| 3/26/21 | Miken Oil Inc. | $1,846,412 |
Haynes and Boone has monitored North American oil and gas producer Chapter 11 bankruptcies in North America since 2015. Over the past six years, there have been 262 producer bankruptcies. In the same period, 298 oilfield services and midstream companies have filed for bankruptcy, bringing the combined North American industry total to 560.
“Since 2015, there have been the exact same number of producer bankruptcies as oilfield services company bankruptcies: 262,” Haynes and Boone noted in its latest report.
In the first-quarter, five oilfield service companies filed for bankruptcy, the third-lowest first-quarter total since 2015. Four of the five filings were Texas companies.
In aggregate, oilfield service companies’ debt totaled $7.2 billion–the third highest first-quarter total since 2015. Seadrill Ltd. accounted for nearly all—99.8%—of the aggregate debt.
In the midstream sector, three companies filed for bankruptcy in the first quarter. The aggregate debt for companies filed during the quarter was $6.7 million.
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