Executive Summary
Oil prices trended up for the beginning of the third quarter but ended the quarter about where they started. For the last two years companies have postponed exploration activities and cut capital projects to drill new wells. Now that oil prices show signs of recovery, production has increased across the U.S.
Although oil prices have increased slightly, oil and gas bankruptcies continued in the third quarter as 52 companies filed for bankruptcy. The majority filed for Chapter 11 protection in hopes to reorganize. Many of the firms that went bankrupt were smaller companies who had less flexibility to exchange debt or draw a second-lien.
The price of crude oil is determined by market forces: supply and demand. On pages 1 and 2, world demand and supply is analyzed in order to understand the current pricing environment.
