{"id":11763,"date":"2015-09-03T06:50:24","date_gmt":"2015-09-03T11:50:24","guid":{"rendered":"http:\/\/olduvai.ca\/?p=11763"},"modified":"2015-09-03T06:50:24","modified_gmt":"2015-09-03T11:50:24","slug":"financial-sector-to-cut-credit-supply-lines-for-oil-and-gas-industry","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=11763","title":{"rendered":"Financial Sector To Cut Credit Supply Lines For Oil And Gas Industry"},"content":{"rendered":"

Financial Sector To Cut Credit Supply Lines For Oil And Gas Industry<\/a><\/h3>\n

More U.S. oil and gas companies could come under financial distress in the coming months as crucial hedging protection begins to expire.<\/p>\n

Many companies had locked in high prices for their oil sales last year, allowing them a degree of protection as oil prices collapsed precipitously over the second half of 2014. Few, if any, hedged all of their production though, so revenues declined along with the oil price. Still, with some protection, the vast majority of companies (aside from a tragic handful) have not missed debt payments and have stayed out of bankruptcy.<\/p>\n

That could become an increasingly tricky feat to pull off. As time passes, more and more hedges are expiring, leaving oil companies fully exposed to the painfully low oil price environment. \u201cA lot of these smaller guys who had bad balance sheets have pretty good hedge books through full-year 2015,\u201d Andrew Byrne, an analyst with IHS, told the\u00a0Houston Chronicle.<\/a>\u00a0\u201cYou can’t say that about 2016.\u201d<\/p>\n

Related:\u00a0Is George Soros Betting on the Long-Term Future of Coal?<\/strong><\/a><\/p>\n

In fact, about one-fifth of North American production is hedged at a median price of $87.51 per barrel. Smaller companies rely much more heavily upon hedging as they are more vulnerable to price swings and are not diversified with downstream assets. Across the industry, IHS estimates that smaller companies had about half of their production hedged at a median oil price of $89.86 per barrel in 2015.<\/p>\n

But as those positions expire, any new hedges will be linked to current oil prices, which are now trading around $45 per barrel (although prices are fluctuating with great intensity and ferocity these days).<\/p>\n

More worrying for the oil and gas companies that are struggling to keep their lights on is the forthcoming credit redeterminations, which typically take place in April and September. Banks recalculate credit lines for drillers, using oil prices as a key determinant of an individual company\u2019s viability.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Financial Sector To Cut Credit Supply Lines For Oil And Gas Industry More U.S. oil and gas companies could come under financial distress in the coming months as crucial hedging protection begins to expire. Many companies had locked in high prices for their oil sales last year, allowing them a degree of protection as oil […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[1361,2116,431,6010,592,1775,5332,7894],"class_list":["post-11763","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-bankruptcy","tag-financial-distress","tag-interest-rates","tag-nick-cunningham","tag-oil-price","tag-oil-price-collapse","tag-oilprice-com","tag-us-oil-and-gas-industry"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11763","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11763"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11763\/revisions"}],"predecessor-version":[{"id":11764,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11763\/revisions\/11764"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11763"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11763"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11763"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}