Page 9 - FSU OGM 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- Two high-profile shale drillers, Chesapeake
tion for their territory in the Amazon region, Energy and Lilis Energy, have filed for Chapter
near the borders with Brazil and Ecuador, will 11 bankruptcy protection, having been hit hard
spark opposition from the oil industry. The by the collapse in crude prices.
country’s legislature is currently mulling propos- In Chesapeake’s case, the filing has long been
als to fast-track a bill upholding the indigenous awaited; analysts have been predicting that the
group’s aim. company would enter bankruptcy proceedings
Guyana, South America’s newest oil pro- since oil prices began to crash in March. Indeed,
ducer, has shortlisted 19 of the 35 companies the company was struggling prior to that to pay
that submitted offers to act as marketing agent down its debt, valued at $9.5bn at end-2019.
for five crude cargoes over a period of 12 months. Chesapeake made a name for itself as one of
The list of bidders moving on to the next stage of the pioneers of the shale gas revolution, racking
the tender includes two Chinese companies and up billions of dollars’ worth of debt in the pro-
three major commodities trading firms. cess. The company had been trying to pay down
its balance under the leadership of CEO Doug
If you’d like to read more about the key events shaping Lawler, who also tried to pivot the firm towards
the Latin American oil and gas sector then please click oil production. The move proved ill-timed, as
here for NewsBase’s LatAmOil Monitor. two collapses in oil prices since 2014 have slowed
Chesapeake’s debt-reduction efforts and affected Chesapeake and
Middle East: A wider view the profitability of its new oil assets.
Regional steps are being taken to continue the In a June 28 statement, Chesapeake said the Lilis are the latest
move away from the ructions and ramifications restructuring support agreement it had reached
of the oil production cuts and oil price crash. No with its lenders will allow it to eliminate around in a growing list
doubt we shall return to these matters, but for the $7bn of its debt.
moment the net is cast wider. For its part, Lilis had $115mn in debt under of bankruptcies
Highlighted this week is ADNOC’s sale of its revolving credit agreement as of the end of in the North
20% and 15% stakes in its refining division, rais- 2019. The company, which is a pure-play Per-
ing $5.8bn. That deal covered the 837,000 bar- mian Basin producer, announced this week that American oil
rel per day Ruwais refining complex, an aging the restructuring plan it had agreed with credi-
85,000 bpd plant and a 1,900-km pipeline net- tors would eliminate almost $35mn of its debt. and gas industry
work.Pipeline developments are in focus in Iran, Lilis cited the downturn in commodity prices
whose president has officially launched work on during the coronavirus (COVID-19) pandemic since 2015
an oil pipeline linking the Persian Gulf port of as the reason for its Chapter 11 filing, saying it
Goreh in Bushehr province to Jask on the Sea of had explored a variety of options for cutting
Oman. costs, improving its liquidity and addressing
Construction work on this link, which will debt maturities.
bypass the Strait of Hormuz, is understood to The companies are the latest in a growing
have begun nearly two months ago. list of bankruptcies in the North American oil
Meanwhile, Iraq’s armed forces have taken and gas industry since 2015, many of which are
on one of the Iranian-backed militias, in a devel- shale drillers. According to law firm Haynes
opment that may point to a potential calming and Boone, more than 200 North American oil
of matters in Baghdad. It remains to be seen and gas producers, owing more than $130bn in
whether Mohammad Khatami, the country’s debt collectively, filed for bankruptcy between
newly-installed president, will be able to exert the beginning of 2015 and May 2020. This year
his authority over the various parties in this frac- alone, at least 20 companies had gone bankrupt
tious country. by May.

If you’d like to read more about the key events shaping If you’d like to read more about the key events shaping
the Middle East’s oil and gas sector then please click the North American oil and gas sector then please click
here for NewsBase’s MEOG Monitor. here for NewsBase’s NorthAmOil Monitor .™

Week 26 01•July•2020 www. NEWSBASE .com P9