{"id":6211,"date":"2015-03-05T06:47:49","date_gmt":"2015-03-05T11:47:49","guid":{"rendered":"http:\/\/olduvai.ca\/?p=6211"},"modified":"2015-03-05T06:47:49","modified_gmt":"2015-03-05T11:47:49","slug":"default-monday-oil-gas-companies-face-their-creditors","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=6211","title":{"rendered":"\u201cDefault Monday\u201d: Oil & Gas Companies Face Their Creditors"},"content":{"rendered":"

\u201cDefault Monday\u201d: Oil & Gas Companies Face Their Creditors<\/a><\/h3>\n

Debt funded the fracking boom. Now oil and gas prices have collapsed, and so has the ability to service that debt. The oil bust of the 1980s took down 700 banks, including 9 of the 10 largest in Texas. But this time, it\u2019s different. This time, bondholders are on the hook.<\/p>\n

And these bonds \u2013 they\u2019re called \u201cjunk bonds\u201d for a reason \u2013 are already cracking. Busts start with small companies and proceed to larger ones. \u201cBankruptcy\u201d and \u201crestructuring\u201d are the terms that wipe out stockholders and leave bondholders and other creditors to tussle over the scraps.<\/p>\n

Early January, WBH Energy, a fracking outfit in Texas, kicked off the series by filing forbankruptcy<\/a>\u00a0protection. It listed assets and liabilities of $10 million to $50 million. Small fry.<\/p>\n

A week later, GASFRAC filed for bankruptcy in\u00a0Alberta, where it\u2019s based,\u00a0and in\u00a0Texas \u2013 under Chapter 15 for cross-border bankruptcies. Not long ago, it was a highly touted IPO, whose \u201cwaterless fracking\u201d technology would change a parched world. Instead of water, the system pumps liquid propane gel (similar to Napalm) into the ground; much of it can be recaptured, in theory.<\/p>\n

Ironically, it went bankrupt\u00a0for other reasons<\/a>: operating losses, \u201creduced industry activity,\u201d the inability to find a buyer that would have paid enough to bail out its creditors, and \u201climited access to capital markets.\u201d The endless source of money without which fracking doesn\u2019t work had dried up.<\/p>\n

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

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