PDA

View Full Version : US petroleum company - Bankruptcy and consolidation thread


ExtraSlow
11-05-2019, 09:26 PM
New thread to separate out discussions of US based companies going bankrupt or being rescued by bargain-hunting consolidators.

Chesapeake is likely to be gone one way or the other soon: https://ca.finance.yahoo.com/amphtml/news/chesapeake-slumps-gas-producer-issues-143727558.html
bigboom
11-06-2019, 11:17 AM
Legacy reserves filed Chapter 11 this year, Concho is down about 50%, all of our other clients in the Permian seem to be struggling, will be interesting to see how the Oxy/Anadarko deal pans out as well, could be crippling. CVX holding it's own though, lucky for them that the Anadarko deal fell through.
msommers
11-06-2019, 11:56 AM
Pengrowth got bought out on Friday. 0.05/share lol
Xtrema
11-06-2019, 12:08 PM
So all these talks about moving to US is BS?
nzwasp
11-06-2019, 12:41 PM
When these companies fail and leave behind X amount of wells, X amount of pipelines and X amount of facilities, who is actually responsible for selling them to another company?
Maybe use houston oil company (the one in the news today) as an example.
lasimmon
11-06-2019, 12:55 PM
When these companies fail and leave behind X amount of wells, X amount of pipelines and X amount of facilities, who is actually responsible for selling them to another company?
Maybe use houston oil company (the one in the news today) as an example.

Whoever is appointed the Receiver.

Mind you Houston didn't actually go bankrupt per se. They just told the AER they no longer have any employees. More fall out from Red Water.
msommers
11-06-2019, 01:59 PM
Isn't that the orphan fund?
lasimmon
11-06-2019, 02:01 PM
Isn't that the orphan fund?

No the Orphan Well Association isn't the receiver. They will get whatever is left over at the end of the receivership and RDT's and what not.
blitz
11-06-2019, 02:03 PM
In a bank driven CCAA process, the receiver runs the sale process and if that fails then the orphan fund takes them.

When companies just shut down without going into CCAA, I'm assuming the crown would still appoint a receiver and follow the same process.
ExtraSlow
11-06-2019, 02:05 PM
Goddamnnit! This is the USA thread. Take your talk of "the crown", Redwater, and the orphan well fund elsewhere.
flipstah
11-06-2019, 02:13 PM
But... What'll be the Thunder arena be called then, ExtraSlow?!
ExtraSlow
11-06-2019, 02:45 PM
Let me close a few deals in that city and I'll handle it.
Perceptionist
11-06-2019, 09:37 PM
It's crazy to think that these US shale companies essentially did this to themselves by becoming too good at producing oil and gas. Chesapeake was one of the pioneers of multi-stage fracking and the technology they helped develop subsequently flooded the entire market with shale gas and ruined their business. Are there other industries where this has happened before?
pheoxs
11-06-2019, 09:39 PM
Wonder if a lot of these companies go under if that means gas will rise back up. Or just that the bigger players will grab a bigger chunk of the market. Natural gas going up helps us a hell of a lot better than oil
bigboom
11-07-2019, 10:10 AM
It's crazy to think that these US shale companies essentially did this to themselves by becoming too good at producing oil and gas. Chesapeake was one of the pioneers of multi-stage fracking and the technology they helped develop subsequently flooded the entire market with shale gas and ruined their business. Are there other industries where this has happened before?

I don't think that's the issue here. Just like all other industries are starting to show, fueling this growth by racking up debt was going to catch up to them eventually, Chesapeake was run into the ground by Mclendon obtaining way too much debt for growth, same issue as Canada, once production no longer became the primary metric to value O&G companies, trouble started. ESG valuation has started to dominate basic financial measures in O&G.
ExtraSlow
11-07-2019, 10:46 AM
I don't think that's the issue here. Just like all other industries are starting to show, fueling this growth by racking up debt was going to catch up to them eventually, Chesapeake was run into the ground by Mclendon obtaining way too much debt for growth, same issue as Canada, once production no longer became the primary metric to value O&G companies, trouble started. ESG valuation has started to dominate basic financial measures in O&G.

Yes, the biggest change is in how O&G companies are valued. It went from production and production growth, to ROR. Now, we can argue all we want about what's the more sensible metric, but when the finance guys on wall street don't care about debt or cash flow, really why should executives?

One neat thing is that the private companies who always looked at stable long-term cash flow and profitability first are chugging along happily and will have the opportunity to become consolidators if they choose.
mr2mike
11-08-2019, 09:37 AM
Goddamnnit! This is the USA thread. Take your talk of "the crown", Redwater, and the orphan well fund elsewhere.
88174

Chesapeake... never invest in a company who's name is on a stadium.
Statistics don't lie.
flipstah
11-08-2019, 10:39 AM
88174

Chesapeake... never invest in a company who's name is on a stadium.
Statistics don't lie.

Hm...

ScotiaBank
Pengrowth
Little Caesars
mr2mike
11-08-2019, 11:04 AM
The list continues even after this article on this poor business dealing was identified.
https://dealbook.nytimes.com/2012/07/03/whats-in-a-stadium-name-often-trouble-for-a-company/