Page 16 - AsianOil Week 26

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

P16 www. NEWSBASE .com Week 26 02•July•2020