About 150 Oil And Gas Companies May Go Bust As A Supply Glut Pressures Prices And Punishes Revenues

About 150 oil and gas companies tracked by energy consultant IHS Inc. may go bust as a supply glut pressures prices and punishes revenues.

The number of companies at risk is more than twice the 60 producers that have already filed for bankruptcy, Bob Fryklund, chief upstream analyst at IHS, said in an interview. A further shake out would help stimulate deals that have been on hold because buyers and sellers have disagreed on asset values, he said.

Oil has collapsed about 70 percent over the past two years as U.S. shale producers boosted output and the Organization of Petroleum Exporting Countries flooded the market with crude to drive out higher-cost suppliers. More bankruptcies would be one signal that energy prices have reached a bottom and would help kick off deals for the $230 billion worth of oil and gas assets currently up for sale, according to Fryklund.

“Nobody is buying because there is a mismatch between expectations,” Fryklund said in an interview in Tokyo. “We need to close that gap. And the way that that will happen is the rest of those bankruptcies will go forward.”

Companies that plan to make investments are likely to wait for prices to gain for six months because they want to be confident in a recovery, according to Fryklund.

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http://www.bloomberg.com/news/articles/2016-02-09/oil-bankruptcies-seen-spurring-m-a-on-signal-prices-near-bottom