Oil bankruptcies slow, even as market recovery wobbles

After a two-year downpour, bankruptcies in the oil patch have slowed dramatically, new data shows.

In the first four months of the year, the number of new oil and gas Chapter 11 cases have come in much lower than what it was in the same period last year, according to reports this week by Dallas law firm Haynes & Boone.

Nine U.S. oil producers, including Houston’s Memorial Production Partners and Vanguard Natural Resources, have filed for Chapter 11 bankruptcy protection this year, compared to 29 this time last year. These cases bring the number of North American oil-company bankruptcies to 123 since 2015, involving nearly $80 billion in debt. Houston-based Adams Resources Exploration Corp. filed the most recent bankruptcy on Haynes & Boone’s list.

The slowdown in oil-producer bankruptcies is a sign higher crude prices and relentless cost-cutting have eased the financial pressure on companies. But this week, U.S. oil prices fell below $46 a barrel, putting the industry on edge again.

“Maybe the storm has not passed,” said Charles Beckham, a partner at Haynes & Boone. Beckham said he wouldn’t be surprised to see another wave of bankruptcies if oil prices don’t quickly recover back into the $50 a barrel range.

“The patience of their lenders could evaporate,” he said.

Oil field services companies, which can’t use oil hedges to bolster their balance sheets, haven’t fared as well. Sixteen service firms have filed for bankruptcy this year, compared to 22 this time last year. The increase brought the number of oil and gas services Chapter 11 cases since 2015 to 127. Those cases involved a combined $25.9 billion in debt, according to Haynes & Boone.

In an earlier version of this article, the Chronicle misidentified the affiliate of Adams Resources & Energy that filed for Chapter 11 bankruptcy last month. It is Adams Resources Exploration Corp.