One Third of Oil Companies at Risk of Bankruptcy This Year: Deloitte

About 175 companies representing one third of publicly traded oil and energy producers have over $150 billion debt.

A new Deloitte study reveals that about 175 companies representing one third of publicly traded oil and energy producers have over $150 billion debt and are at a high risk of going bankrupt this year, media reports.

The study, which reviewed over 500 publicly traded oil and natural gas exploration and production companies across the globe, says low commodity prices are preventing these firms from accessing cash and cutting their debts.

The declining value of their secondary stocks and asset sales is also exacerbating their ability to generate money, according to Deloitte, and not even the ability to produce crude for less than $15 per barrel – which 95 percent of oil producers were now said to be able to do – may be enough to save some of these companies.

William Snyder, head of corporate restructuring at Deloitte, says, "These companies have kicked the can down the road as long as they can and now they're in danger of kicking the bucket.

"It's all about liquidity."

By contrast, Deloitte found that of the 53 U.S. energy firms that filed for bankruptcy during the fourth quarter of 2015, only 14 were service providers, a situation likely due to lower capital costs and a trend Deloitte believes will continue in the short term.

However, Snyder remarked, "Eventually, though, they've got to run out of gas, too."

Presumably, other events will make life tough for producers this year, including Iran's return to the international market, which in November prompted the International Energy Agency to say it expects producers "to grow still more competitive on pricing."