Page 8 - NorthAmOil Week 26

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Meanwhile in Peru, indigenous leaders are con- North American shale shifts
cerned that their efforts to secure legal protec- Three shale drillers, Chesapeake Energy, Lilis
tion for their territory in the Amazon region, Energy and Sable Permian Resources, have filed
near the borders with Brazil and Ecuador, will for Chapter 11 bankruptcy protection, having
spark opposition from the oil industry. The been hit hard by the collapse in crude prices.
country’s legislature is currently mulling propos- (Bankruptcies highlight turnaround in shale for-
als to fast-track a bill upholding the indigenous tunes, page 11)
group’s aim. In Chesapeake’s case, the filing has long
Guyana, South America’s newest oil pro- been awaited; analysts have been predicting
ducer, has shortlisted 19 of the 35 companies that the company would enter bankruptcy
that submitted offers to act as marketing agent proceedings since oil prices began to crash in
for five crude cargoes over a period of 12 months. March. Indeed, the company was struggling
The list of bidders moving on to the next stage of prior to that to pay down its debt, valued at
the tender includes two Chinese companies and $9.5bn at end-2019.
three major commodities trading firms. Chesapeake made a name for itself as one of
the pioneers of the shale gas revolution, racking
If you’d like to read more about the key events shaping up billions of dollars’ worth of debt in the pro-
the Latin American oil and gas sector then please click cess. The company had been trying to pay down
here for NewsBase’s LatAmOil Monitor. its balance under the leadership of CEO Doug
Lawler, who also tried to pivot the firm towards Chesapeake,
Middle East: A wider view oil production. The move proved ill-timed, as
Regional steps are being taken to continue the two collapses in oil prices since 2014 have slowed Lilis and Sable
move away from the ructions and ramifications Chesapeake’s debt-reduction efforts and affected
of the oil production cuts and oil price crash. No the profitability of its new oil assets. are the latest in
doubt we shall return to these matters, but for the In a June 28 statement, Chesapeake said the
moment the net is cast wider. restructuring support agreement it had reached a growing list
Highlighted this week is ADNOC’s sale of with its lenders will allow it to eliminate around of bankruptcies
20% and 15% stakes in its refining division, rais- $7bn of its debt.
ing $5.8bn. That deal covered the 837,000 bar- For its part, Lilis had $115mn in debt under in the North
rel per day Ruwais refining complex, an aging its revolving credit agreement as of the end of
85,000 bpd plant and a 1,900-km pipeline net- 2019. The company, which is a pure-play Per- American oil
work.Pipeline developments are in focus in Iran, mian Basin producer, announced this week
whose president has officially launched work on that the restructuring plan it had agreed with and gas industry
an oil pipeline linking the Persian Gulf port of creditors would eliminate almost $35mn of its since 2015
Goreh in Bushehr province to Jask on the Sea of debt.
Oman. Lilis cited the downturn in commodity prices
Construction work on this link, which will during the coronavirus (COVID-19) pandemic
bypass the Strait of Hormuz, is understood to as the reason for its Chapter 11 filing, saying it
have begun nearly two months ago. had explored a variety of options for cutting
Meanwhile, Iraq’s armed forces have taken costs, improving its liquidity and addressing
on one of the Iranian-backed militias, in a devel- debt maturities.
opment that may point to a potential calming Chesapeake, Lilis and Sable are the latest in a
of matters in Baghdad. It remains to be seen growing list of bankruptcies in the North Amer-
whether Mohammad Khatami, the country’s ican oil and gas industry since 2015, many of
newly-installed president, will be able to exert which are shale drillers. According to law firm
his authority over the various parties in this frac- Haynes and Boone, more than 200 North Amer-
tious country. ican oil and gas producers, owing more than
$130bn in debt collectively, filed for bankruptcy
If you’d like to read more about the key events shaping between the beginning of 2015 and May 2020.
the Middle East’s oil and gas sector then please click This year alone, at least 20 companies had gone
here for NewsBase’s MEOG Monitor. bankrupt by May.™

P8 www. NEWSBASE .com Week 26 02•July•2020