Markets in Focus


Q2 2021

Markets in Focus | Energy Energy Q2 2021

To say that 2020 was a challenging year for the oil and gas industry would be a gross understatement considering the events that took place. Given sub $2.00/mcf Henry Hub prices for most of the year, a sub $50/bbl WTI price environment (including a day of negative prices) for much of the year, increasing ESG requirements, the rising cost of debt for the industry, a stagnant A&D market and multiple years of faltering commodity prices prior to 2020, all culminated to tremendous pressure on the industry. As a result, 107 companies (46 E&P and 61 OFS companies) filed for Chapter-11 bankruptcy protection in 2020, which was the most in a single year since 2016 when 142 companies filed.¹ Furthermore, it is estimated that 120,000 jobs were lost in the U.S. oil and gas industry in 2020.²

However, today the industry is in a much stronger position. Commodity prices have improved significantly in 2021 due to OPEC production cuts and an improved economic outlook resulting in higher consumption estimates. Despite the improved commodity price environment, there is still pressure on everyone in the industry to continue focusing on reducing costs, deleveraging, and finding operational efficiencies. Higher commodity prices are also supporting limited growth activity and Capex spending from those who have access to capital. This is particularly true of the Permian Basin, which has seen a 32% increase in rig count from 179 to 237 between 1/1/2021 and 6/18/2021.³ As for other basins, activity has been steady but relatively flat in comparison.