HOUSTON – Oil-company bankruptcies surged over the past two months as drillers ran into hefty interest payments amid one of the toughest financial squeezes for the industry in decades.
Eighteen North American oil companies filed for bankruptcy in March and April, a big two-month haul that included two of Houston’s midsized public drillers, Energy XXI and Ultra Petroleum Corp.
Several of the 18 producers chose not to make quarterly interest payments on a combined $8.9 billion in debt while banks cut oil company credit lines, part of a semi-annual review by lenders.
“There’s no point in paying the interest to bond holders at that point,” said Buddy Clark Jr., an attorney at Dallas law firm Haynes & Boone. “They’ve got to conserve cash. A lot of the bondholders will be out of the money.”
Since the start of the downturn, 69 oil companies in the United States and Canada have filed court papers seeking Chapter 11 bankruptcy protection, according to Haynes & Boone. Eleven of them filed in April. And 27 filed this year, compared to just eight that filed in the first four months of 2015.