The oil and gas sector is no stranger to oil price cycles, and for many, the scars from the last downturn are still visible. However, capital structures are again under strain from the biggest oil price correction in decades and with most industry commentators forecasting a subdued outlook for the sector, many are predicting a further wave of restructurings.
In our latest publication, Restructuring Advisory Partner, Chad Griffin, explores the challenges facing exploration and production, and oil service sector companies, and what may lie ahead.
Drawing on his considerable sector knowledge, Chad’s analysis includes the rapid acceleration of change, brought about by the COVID-19 crisis, and how underlying trends away from hydrocarbons such as energy transition, agile working and greater use of technology may leave a permanent impact on long-term oil demand. He looks at how, combined with greater risk factors, this may undermine the economic rationale for a more patient, supportive approach to oil sector restructurings.
As COVID-19 continues to weigh heavily on sector confidence and long-term oil demand, businesses need to focus on conserving cash, take actions to reduce costs and be competitive on price. For our part, we remain committed to supporting management teams with contingency planning in order to help them ride out the months ahead.