Tuesday, July 19, 2016

The Energy “Death List”:

Who’s On It and Who’s Next? *

In June, Warren Resources filed for Chapter 11 bankruptcy. The Houston-based company was just another one added to the group of 150 North American industry filings over the last year and a half since the oil decline started.
Warren Resources could also be found in the 2015 publication of an “oil company death list” put out by Oxford Club investors’ network out of Baltimore. 19 companies were accused of “toxic” debt-to-equity ratios on the list. Since it was published, eight of the companies on the list have filed for protection, another was purchased at a low price, and few still are trying to keep their head above water.

Out of the eight companies that filed for bankruptcy, seven have headquarters located in Houston: Energy XXI Ltd., Goodrich Petroleum, Halcón Resources, Hercules Offshore, Linn Energy, and Vantage Drilling, and of course, Warren Resources. The remaining company that filed, Magnum Hunter Resources, had relocated to Irving from Houston just before filing.
Both Magnum and Hercules recently surfaced from under the shadow of bankruptcy, but Hercules quickly had to file for Chapter 11 again.
LRR Energy, one of the companies on the death list, was recently purchased by Vanguard Natural Resources, another Houston-based company that was also listed. By the middle of Friday, the firm was trading treacherously low, just under $1.40 per share on the Nasdaq.
Other listed companies trading close to $1 per share include Midland’s Legacy Reserves, EXCO Resources out of Dallas, and the Pennsylvania-based Rex Energy. Houston’s EV Energy Partners, which is handled by EnerVest, is seeing prices barely over $2 per unit. Another company, Exterran Partners out of Houston, was recently renewed into Archrock Partners.
Three out of the four companies left on the death list are still alive:
Houston-based Sanchez Energy Corporation, Tetra Technologies Inc. out of The Woodlands, and Denver’s Antero Resources. The remaining company on the list out of the original 19 is Midland’s Parsley Energy and is said to be “thriving.”
Gone are the days of $100 per barrel oil after mid-2014. In February, prices dropped down to almost $25 per barrel before jumping back to over $45 per barrel on Friday.
Haynes and Boone has followed 157 North American energy firms that have filed for protection since the start of 2015 through June of this year. 82 of them, over half of the original number, are based out of Texas.
Besides the companies on the death list, some of the largest filings include Berry Petroleum, Breitburn Energy Partners, Midstates Petroleum, Paragon Offshore, Quicksilver Resources, Sabine Oil & Gas, Samson Resources, Sandridge Energy, Seventy Seven Energy, Swift Energy, and Ultra Petroleum.
Houston’s C&J Energy Services and Frisco’s Comstock Resources are just some of the companies trading for less than a dollar per share on the stock exchanges.
* Houston Energy Insider, Article written by HEI contributor Briana Steptoe.

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