U.S., Canadian oil firm bankruptcies surged 50% in 2019, report says

The number of oil and gas company bankruptcies in the United States and Canada rose 50 per cent in 2019 over the previous year, and is likely to increase as a slide in energy prices continues to shake producers, law firm Haynes and Boone said in a report this week.

U.S. and Canadian oil and natural gas exploration and production company bankruptcies totalled 42 in 2019, up from 28 in 2018, the Dallas law firm said Wednesday.

The increase seems likely to continue, said Buddy Clark, partner at Haynes and Boone.

"I think the trend line should be moving up in the first half of 2020," Clark said.

A total of 208 oil and gas production companies have filed for bankruptcy between 2015 and 2019, according to the report.

"This increase in year-over-year filings indicates that the reverberations of the 2015 oil price crash will continue to be felt in the industry through at least the first half of 2020," Haynes and Boone said in the report.

The impact of new U.S. oil and natural gas production is being felt globally, Clark said.

"That's why you can bomb a major oil facility in Saudi Arabia or kill an Iranian general or shut in all Libyan oil production and prices don't move," he said.

Thanks to a shale boom, the United States has become the world's top oil producer, adding to a global surplus leading the market to shrug off September's attacks on Saudi Arabia's oil facilities, January's U.S. air strike that killed a top Iranian commander, and this week's disruptions to Libya's crude output.

Oilfield service companies were again hit hard with the number of bankruptcies nearly doubling from 12 in 2018 to 21 in 2019, the largest being the $7.4-billion US filing by Weatherford International in July.

Midstream companies that provide storage and pipelines to producers fared better with only two bankruptcies in 2019 out of a total of 28 since the beginning of 2015.