The shakeout in Canada’s oilpatch that followed the collapse of global oil prices may be over, the Canadian Press reports, citing analysts who point to 26 fossil companies that have entered restructuring or receivership so far this year.
“A lot of the troubled children have been dealt with,” said merger and acquisition specialist Tom Pavic of Calgary-based Sayer Energy Advisors.
The total number of companies disappearing this year is half a dozen more than in all of 2015, or in the last oil downturn in 2009, and more than three times the number that fail in an average year. About 60,000 people have lost their jobs in Canada’s fossil extraction sector since 2013.
But Pavic predicted that the worst may be over, on the assumption that higher prices for oil and natural gas will bring some stability to the industry. “There will still be more receiverships, but I don’t believe it will be as much as this year.”
His perspective was shared by Bruce Edgelow, a vice-president at Alberta lender ATB Financial, who saw signs of stability in the company’s recent review of its energy portfolio. “People have kind of settled into the cash flow they’re getting,” he said. “The market has clearly stabilized.”
“However,” CBC adds, “Pavic and Edgelow pointed out that access to investment capital remains tight in the oilpatch, with only large, well-managed companies able to borrow money to fund drilling programs.
“A 1,000-barrel-a-day producer is in tough shape these day to find somebody as a new lender,” said Edgelow.