The price of crude oil is on the decline again and experts in the industry are starting to worry. If the oil prices remain low for a prolonged time, companies will likely have to operate at a marginal loss. Companies that don’t have enough money to weather the low prices may even face bankruptcy.
Due to the initial drop in oil prices during the end of 2014 and first few months of 2015, some companies have already gone under. The Wall Street Journal reported that Quicksilver Resources filed for Chapter 11 bankruptcy protection after missing a bond payment in March.
According to their website, Quicksilver Resources is a natural gas and oil exploration and production company based in Fortworth Texas. The company is focused on properties located onshore in North America.
Other reported bankruptcies include BPZ Resources, Dune Energy, Sabine Energy, WBH Energy and American Eagle Energy. These businesses shutting down affected the financial sector and impacted shareholders, land owners who leased their property to drillers, as well as those workers who have now become unemployed.
This most recent drop in oil prices is predicted to cause even more bankruptcies.
A report issued by Investment bank Goldman Sachs Group Inc. ranks how it foresees the oil companies will hold up when exposed to low oil prices.
The companies that they claimed to be most at risk at the time is was issued in January include: Approach Resources (AREX), Exco Resources (XCO), Goodrich Petroleum (GDP), Halcon Resources (HK), Magnum Hunter’s (MHR), Magnum Hunter’s (MHR), Rex Energy (REXX), Sabine Oil & Gas, SandRidge Energy (SD), and Swift Energy (SFY).
An article by investopedia.com (http://www.investopedia.com/articles/investing/072815/oil-companies-near-bankruptcy.asp?partner=YahooSA) looks at the stock performance of the companies that were listed as the most at risk in Goldman Sachs report.
- Approach Resources (AREX) has seen its stock price tumble more than 33% year-to-date.
- Exco Resources (XCO) shares are down 74%.
- Goodrich Petroleum (GDP) is down over 80%.
- Halcon Resources (HK) has lost 50% of its market capitalization.
- Magnum Hunter’s (MHR) stock price is down almost 70% since Jan. 1.
- Midstates Petroleum (MPO) has lost 65% of its value.
- Rex Energy (REXX) is down nearly 56%.
- Sabine Oil & Gas has gone bankrupt.
- SandRidge Energy (SD) trades more than 70% lower than at the beginning of the year.
- Swift Energy (SFY) is down more than 80% year-to-date.
The foregoing information, which is all publicly available, is being provided by The White Law Group. The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.
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