$40 Oil Isn’t High Enough For Indebted U.S. Shale Drillers — Rystad Energy

The Covid-19 pandemic has added severe financial strain on a North American upstream industry that was already reeling under billions of dollars of debt. With WTI climbing past $40 a barrel, most exploration and production firms (E&Ps) have been able to keep their head above water, but unless prices strengthen further about 150 more E&Ps will need to seek Chapter 11 protection through 2022, a Rystad Energy analysis shows. So far this year, according to Haynes & Boone, 32 E&Ps have already filed for Chapter 11, recording a cumulative debt of about $40 billion. On the oilfield services (OFS) front, 25 companies have filed for Chapter 11. If WTI remains at $40, Rystad Energy estimates 29 more E&P Chapter 11 filings this year, adding another $26 billion of debt at risk.

In a scenario with WTI continuing to hover around $40 over the next two years, we can expect another 68 Chapter 11 filings from E&Ps in 2021, and 57 more in 2022, adding $58 billion and $44 billion, respectively, of more debt at risk. That would bring the total amount of E&P debt at risk from now until the end of 2022 to $128 billion....

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$40 Oil Isn’t High Enough For Indebted U.S. Shale Drillers
Rystad Energy