Stephen Pezanosky in Law360: Energy Companies Brace For Ch. 11 As Oil Prices Stay Low


After a year of speculation on how the energy industry would cope with plummeting oil prices, this fall could be the season for more bankruptcies, restructurings and asset divestiture for oil companies facing a tough lending environment and the looming roll-off of a number of hedges, lawyers say...

There was some fallout, particularly among small and midmarket oilfield services companies, but instead of bankruptcies, most struggling companies either worked with lenders to execute controlled liquidations, out-of-court restructurings or reach a stop-gap forbearance agreement to kick the can down the road in the hope that commodity prices would stabilize later in the year, Haynes and Boone LLP partner Steve Pezanosky said...

Those companies thought they would make it through the downturn because they were hedged properly and expected prices to bounce back, but if prices stay low, it will be difficult for them to replace those hedges at levels that will allow them to have predictable cash flow, he said.

“They’re getting really nervous,” Pezanosky said. “They’re starting to get very, very worried.”

Excerpted from Law360. To read the full article, click here (subscription required).

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