E&P Bankruptcies On The Rise, But There Are Plenty Of Buying Opportunities

Unfortunately, the rise in crude oil prices in 2016 is too little too late for a number of oil & gas E&Ps. However, according to Roth Capital Partners analyst John White, there are still plenty of E&P buying opportunities out there.

“We don’t like writing about this any more than you like reading about it (except for certain attorneys and financial advisors), but the number of oil and gas producers filing for bankruptcy is on the rise,” White explains.

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There have now been a total of 77 North American oil and gas producer bankruptcy filings since the beginning of 2015. Combined, these 77 bankruptcies have involved roughly $51.9 billion in cumulative secured and unsecured debt. Approximately half (35) of the total bankruptcies since the beginning of 2015 have taken place so far in 2016. This pace suggests that by year’s end, North American E&P bankruptcies will be up roughly 200 percent compared to last year.

Despite that bleak outlook for the space as a whole, Roth sees several buying opportunities.

The firm maintains Buy ratings on the following stocks:

Callon Petroleum Company CPE
Evolution Petroleum Corp EPM
Earthstone Energy Inc ESTE
Halcon Resources Corp HK
Lonestar Resources Ltd LNREF
Petroquest Energy Inc PQ
Ring Energy Inc REI
RSP Permian Inc RSPP

Disclosure: the author holds no position in the stocks mentioned.