While business is brisk at the energy company funeral homes in Houston and elsewhere, there are also some names that will rise from the dead, according to a presentation made to the Houston Producers' Forum last week. Further, Bernard "Buddy" Clark, a partner at the energy finance firm Haynes and Boone, LLP, said there is also a mountain of more than $85 billion in private equity funds waiting to be invested soon in assets of many of these fallen energy companies.
The latest lineup of energy companies, resembling a scene from The Walking Dead, was revealed at the Houston Producers' Forum and is listed below. Hide the children! It's not a pretty sight.
Potential bankruptcies from interest payment defaults include:
Name Grace Expiry Date Total Debt
Warren Resources March 1, 2016 $453 million
Energy XXI March 17, 2016 (paid) $3.64 billion
Venoco March 17, 2016 $708 million
Sandridge March 19, 2016 $4.121 billion
Pacific E&P March 31, 2016 $5.428 billion
Chaparral Energy April 1, 2016 $1.798 billion
LINN Energy April 15, 2016 $9 billion
Berry Petroleum April 15, 2016 $900 million
Energy XXI (ECG) April 15, 2016 $426 million
Potential bankruptcies from extraordinary draws include:
Name Amount Total Debt
Bonanza Creek $209 million $300 million
Chaparral Energy $141 million $528 million
LINN Energy $919 million $9 billion
Sandridge $500 million $4.121 billion
Stone Energy $385 million $496 million
W&T Offshore $340 million $1.2 billion
Ultra Petroleum $266 million $3.76 billion
Meanwhile, opportunities from the current crisis, Clark suggests, include the following companies and themes:
A) Debt Restructure (Debt for Equity)
Companies: Sabine, NGR, Paragon
B) Contract Restructuring (Gas Gathering)
Companies: Sabine, Quicksilver, Magnum Hunter
C) Portfolio Restructure (Asset Sales)
Companies: Quicksilver, Swift, Argent
In his presentation, Clark also addressed that there is $17 billion of cumulative E&P debt to date in the last 14 months. He notes that energy loans are only down 7% from their peak, hence the correction is going to take a good while longer. And bank regulations are putting a real chill in loan originations.
Clark's punch line is that private equity providers will play a key role in revaluing these energy assets. They have more than $85 billion to put to work, but it's going to be a buyer's market for a while.
Don't look for equities to bounce much anytime soon. Much of the action will likely be on the debt side of the balance sheet for the near future.