Page 8 - GLNG 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- 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
Middle East: A wider view the profitability of its new oil assets. Chesapeake,
Regional steps are being taken to continue the In a June 28 statement, Chesapeake said the
move away from the ructions and ramifications restructuring support agreement it had reached Lilis and Sable
of the oil production cuts and oil price crash. No with its lenders will allow it to eliminate around
doubt we shall return to these matters, but for the $7bn of its debt. are the latest in
moment the net is cast wider. For its part, Lilis had $115mn in debt under
Highlighted this week is ADNOC’s sale of its revolving credit agreement as of the end of a growing list
20% and 15% stakes in its refining division, rais- 2019. The company, which is a pure-play Per- of bankruptcies
ing $5.8bn. That deal covered the 837,000 bar- mian Basin producer, announced this week
rel per day Ruwais refining complex, an aging that the restructuring plan it had agreed with in the North
85,000 bpd plant and a 1,900-km pipeline net- creditors would eliminate almost $35mn of its
work.Pipeline developments are in focus in Iran, debt. American oil
whose president has officially launched work on Lilis cited the downturn in commodity prices
an oil pipeline linking the Persian Gulf port of during the coronavirus (COVID-19) pandemic and gas industry
Goreh in Bushehr province to Jask on the Sea of as the reason for its Chapter 11 filing, saying it since 2015
Oman. had explored a variety of options for cutting
Construction work on this link, which will costs, improving its liquidity and addressing
bypass the Strait of Hormuz, is understood to debt maturities.
have begun nearly two months ago. Chesapeake, Lilis and Sable are the latest in a
Meanwhile, Iraq’s armed forces have taken growing list of bankruptcies in the North Amer-
on one of the Iranian-backed militias, in a devel- ican oil and gas industry since 2015, many of
opment that may point to a potential calming which are shale drillers. According to law firm
of matters in Baghdad. It remains to be seen Haynes and Boone, more than 200 North Amer-
whether Mohammad Khatami, the country’s ican oil and gas producers, owing more than
newly-installed president, will be able to exert $130bn in debt collectively, filed for bankruptcy
his authority over the various parties in this frac- between the beginning of 2015 and May 2020.
tious country. This year alone, at least 20 companies had gone
bankrupt by May.
If you’d like to read more about the key events shaping
the Middle East’s oil and gas sector then please click If you’d like to read more about the key events shaping
here for NewsBase’s MEOG Monitor. the Latin American oil and gas sector then please click
here for NewsBase’s NorthAmOil Monitor.™

P8 www. NEWSBASE .com Week 26 03•July•2020