Oil prices went negative. Hundreds of US oil companies can go bankrupt



Oil prices went negative. Hundreds of US oil companies can go bankrupt
The US oil industry is facing a doomsday eschaton

Coronavirus epidemic causes oil demand to drop so fast that the world is running out of storage to store barrels. At the same time, Russia and Saudi Arabia flooded the entire world with extra supplies.
Due to this double black swan, oil prices have fallen to a level that makes it impossible for US shale oil companies to make money. US crude for delivery in May went negative on Monday - there has not been an event since Niamx Oil Futures started trading in 1983. It was easily the worst record in the oil market.
US crude for June delivery is still trading above $ 20 a barrel - but even more devastating.
$ 30 is bad enough already, but once you get $ 20 or even $ 10, it's a complete nightmare, said Artem Abramov, head of research for the Registered Energy.
Many oil companies borrowed heavily in good times. Some of these people will not survive this historic disaster.
In the $ 20 oil environment, 533 US oil exploration and production companies will enter bankruptcy by the end of 2021, according to Release Energy. According to Randstad, at $ 10, there will be more than 1,100 bankruptcies.
At $ 10, almost every US E&P company that has a loan will have to file Chapter 11 or consider strategic opportunities, said Abramov.

The cut in the OPEC failed to end the panic

The most striking part of the record low in oil prices is that it has come to an end after Russia and Saudi Arabia agreed to end their epic prices following President Donald Trump's intervention. OPEC + agreed to reduce oil production by a record amount.
The OPEC + deal will increase the number of jobs and stability in the oil patch, Trump said.
This will save millions of energy jobs in the United States," Trump tweeted April 12. , I want to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia.

Nevertheless, crude oil has been a disaster, as they do not reduce production until May. And the demand is diminishing as jets, cars and factories are hit by the Corona virus-infected disease.
The hope in the oil industry is that futures contracts hurt Monday.
The record for the May deal comes at a very thin trading volume before Tuesday's expiration. That's because there are concerns that there will be no room for storing these barrels in May. The June contract, however, fell to 22 dropped barrels by just 10 dropped. And Brent Crowd, a world-class mark, fell just 5 per cent to $ 26.50 a barrel.

Nevertheless, oil contracts pass every month and they do not record a decline.
"There are going to be a lot of companies that can't survive the plight, said Ryan Fitz-Morse, an energy strategist at Robo Bank. "This is one of the worst on the record.
'Unprecedented' tensions in the oil industry
The effects of stress on the oil patch are high.


The S&P 500's energy sector has lost more than 40% of its value this year, despite a dramatic jump in the stock market over the past month.

Noble Energy (NBL), Halliburton (HAL), Marathon Oil (MRO) and Occidental (OXY) have lost more than two-thirds of their value. Even Dow Member ExxonMobil (XOM) has a 38% reduction.
White Petroleum became the first domino to fall when the former Shell Star filed for Chapter 11 protection on April 2, but it certainly won't be the last.

Raistad's 20 scenario predicts that the oil company's debt of over $ 70 billion will be restructured in bankruptcy, followed by $ 177 billion in 2021. And it only accounts for exploration and production companies, not a service industry that provides tools and workforce to drillers.
The important thing is how long oil prices will keep the mess going. Rapid returns in prices can allow many oil companies to avoid bankruptcy.

Buddy Clark, the co-chair of the energy practice at Houston law firm Haynes and Boone, said his firm is extremely busy working on oil bankruptcy. Hans and Bone have been forced to hire lawyers from other areas of the firm to work on the oil issue.
I don't think I've ever seen anything like this in my life. It's unusual, said Clark, who started working in the industry in 1982.

Clark believes that despite further price reductions, there will be only "just" - 100 oil bankruptcies in 2020 right now.


It's hard to believe 100 bankruptcy is an optimistic view. It shows you where we are, Clark said.
The litigation may be on the way
Had oil prices not fluctuated drastically, there would have been more bankruptcy already. Clark said companies are having trouble developing restructuring plans because they do not know what the cost of the item will be.



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