Midstates, Ultra Push Total U.S. Oil And Gas Bankruptcies To 59

The oil and gas crisis claimed two more U.S. victims this week with Midstates Petroleum Company Inc MPOYQ and Ultra Petroleum Corp. UPLMQ both filing for creditor protection. The two new bankruptcies bring the total number of U.S. oil and gas victims to 59.

Unfortunately, with no end to the market slump in sight, more companies will likely continue to fall throughout the remainder of 2016.

More Debt Ahead

According to data from Haynes & Boone, the wave of energy bankruptcies is rapidly approaching the 68 bankruptcies of the telecom bust in 2002–2003.

A total of 15 oil and gas companies filed for bankruptcy in Q1, and Akin Gump’s Charles Gibbs expects even more bankruptcies in Q2. In fact, he projects the total number of energy bankruptcies will eventually climb into the triple digits.

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Struggling oil and gas companies have eliminated every cent of spending possible and are hoping to ride out the downturn until higher oil prices return. The rally in oil prices in recent weeks has provided some relief, but there is little evidence that oil prices will continue to rise in the near term.

Analyst Dallas Salazar believes that Chesapeake Energy Corporation CHK, Halcon Resources Corp HK and WPX Energy Inc WPX are among the energy names with the highest bankruptcy risk at this time.

Disclosure: The author holds no position in the stocks mentioned.