MOSCOW (MRC) -- Lonestar Resources US Inc filed for Chapter 11 bankruptcy protection on Thursday, joining a clutch of shale companies that have succumbed to weak crude prices as COVID-19 pandemic crimps fuel demand, said Hydrocarbonprocessing.
Lonestar, which operates in Texas’ Eagle Ford basin and produced roughly 14,000 barrels of oil equivalent per day, had a total debt of USD546.3 million as of June 30 and made the move after defaulting on two debt payments.
Shares of the company fell 13% to 20 cents, shrinking its market capitalization to just over USD5 million from nearly USD350 million at its peak in 2014. Weak crude demand due to the pandemic has proved to be a double-whammy for shale companies, which grew rapidly early in the decade but in the process amassed a large pile of debt.
Through the end of August, 36 oil and gas producers with USD51 billion debt have filed for bankruptcy this year, according to the law firm Haynes and Boone. It includes Chesapeake Energy, Chaparral Energy, Whiting Petroleum Corp., and Oasis Petroleum Inc filed for Chapter 11 on Tuesday.
Industry experts expect more companies to file for bankruptcy before the year is over. Gas producer Gulfport Energy Corp, which has hired a debt restructuring adviser, has interest payments on its debt due on Oct. 15, Nov. 1 and Nov. 15.
The upcoming biannual review of how much money energy companies can borrow against the value of their oil and gas reserves can also push some of the smaller companies, already struggling to find other methods of financing, into bankruptcy.
As mRC informed earlier, US propane and propylene stocks surged 4.1 million bbl during the week ended 25 September, according to the US Energy Information Administration (EIA). Nationwide stocks totaled 102 million bbl, up 4.2% on the week and 5.9% above year-ago levels. An OPIS survey of market participants on Tuesday called for an average build of 2.2 million bbl on the week, with estimates ranging from 500,000 bbl to 4 million bbl.
As per MRC's DataScope report, Russian companies significantly raised their purchasing of PP in foreign markets in August partially because of a major increase in demand, imports were 21,200 tonnes versus 17,200 tonnes a month earlier. Thus, overall PP imports into Russia reached 143,200 tonnes in January-August 2020, compared to 120,100 tonnes a year earlier. Purchasing of all grades of propylene polymers in foreign markets increased, with homopolymer PP imports accounting for the most noticeable rise.