E & P Industry Overview
The collapse of oil prices in late 2014 had immediate effects on the exploration and production industry. E&P companies cut capital expenditures, reigned in drilling actives, and had to redo business models. During the first quarter of 2016, 43 exploration and production companies in the U.S. filed for bankruptcy. The majority filed for Chapter 11 protection in hopes to reorganize. Many of these companies were forced to sell assets in order to generate cash to pay off debts. But as crude prices fell even further, the value of reserves and the selling price of these assets tumbled making it even more difficult to generate sufficient liquidity.
Crude oil prices over the last quarter fell to decade lows, but showed some signs of improvement over the last few weeks. The price of crude oil is determined by market forces: supply and demand. Below, world demand and supply is analyzed in order to understand the current pricing environment.
