Oil services firms face $110B in debt — and the bill is coming due

HOUSTON – Oil equipment companies have a lot riding on the sputtering market recovery.

During the next five years, they’ll have to pay off about $110 billion in maturing debt. So unless energy prices and drilling rebound in time, many of them will probably fail, Moody’s Investors Service said in a new report released Tuesday.

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The credit ratings agency says one-third of the 67 companies on its list could see debt levels climb to 10 times more than raw earnings, putting them at risk of debt defaults. About $33 billion of the bond and term loans come due by 2018.

The U.S. shale energy bonanza spurred drillers and service companies to run up a half-trillion dollars in debt from 2010 to 2015, but the collapse of oil prices has bankrupted 173 companies across North America since the beginning of last year, according to the law firm Haynes & Boone.

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“We don’t expect the (oil field services) sector to recover until mid-2017,” Moody’s analysts said in the report. Many, the firm said, don’t have the cash to wait for a full recovery in drilling activity.

Moody’s says $60 billion of the debt coming due over the next five years comes from bonds sold to investors; another $45 billion, from revolving credit lines.