As we have seen in other articles, one of the most important industries in history has been the oil and gas. These businesses, have been for years’ big drivers for the economy in different countries, giving not only financial resources for them but also political tools for their projects and initiatives. In addition, due to the great monetary power is given by oil and hydrocarbons, giant corporations have acquired great influence and control in those nations, but there are some cases where all this power has been affected for different reasons.
In this article, we will talk about the great influence of some amazing and giant companies from the hydrocarbons industry, which has faced bankruptcy for different causes. Besides, we will see how the politics, religion, culture and other elements, have influenced in the operation of these organizations, taking them to face a bankruptcy process.
To understand and know how these organizations have faced the mentioned bankruptcy situations, and why they have been there, it is important to have a brief context about the oil industry and how it works in today’s economy and politic. Moreover, it is vital to understand how its price operates and which elements determine it.
The oil and its price
There are a lot of countries where hydrocarbons are vital for their economies and political projects, due to the great reserves they have. Nations like Saudi Arabia, Russia, Canada, Venezuela, Iran, among other countries have as a principal asset the oil that is in their soil, supporting different campaigns and initiatives. However, its price can be determined by multiple factors, and these states can face several issues when there are low prices in this important mineral.
One of the most key reasons for establishing the oil prices is the offer that these mentioned countries can give to the world’s market. If they are offering great amounts of oil, then the consumer countries will have better prices to deal with, so the hydrocarbons fees can decrease. But if the consumption of oil by these states is increasing day by day, and the oil offer cannot satisfy their demand, then its prices can increase. One of the clearest examples for this situation is the Chinese economy deceleration. This Asiatic giant was in the last years one of the biggest oil consumers in the planet, increasing the oil values, but its consume has been decreasing lately due to its economic slowing, so the oil prices are lower.
Other significant elements that can determine the oil charges are the new production techniques like fracking, other energy alternatives which are being more popular day by day, the production levels determined by the OPEC members, among other reasons.
Having this context clear, then we can talk about some bankruptcy cases in oil companies around the planet, showing that even for important businesses like the hydrocarbons, financial and liquidity problems can appear.
Pacific Exploration & Production
This Canadian organization was founded in 2009, having headquarters in Toronto. Currently, it has more than 3000 employees and operating incomes for more than 1 billion dollars per year. This company, dedicates all its efforts in the exploration and production of heavy oil and natural gas, principally in Colombia and Peru, but it has also presence in other South American nations.
Since its foundation, Pacific Exploration & Production has been one of the most important oil exploration companies in South America, especially in Colombia being the second most important petroleum organization in that country. In 2015, the company was affected by the oil prices decreasing, so the 20% of the business was sold to the investment group Derwick Associates for almost $290 million dollars. One year later, Pacific Exploration & Production had liquidity problems, announcing its restructuration and filing for bankruptcy protection for having debts greater than $5.3 billion dollars.
Considered one of the biggest oil and gas companies in the United States, this organization faced a bankruptcy process in 2015, for having debts greater than $4.3 billion dollars. It was founded in 1971 by Charles Schusterman, an important Russian-American businessman. Currently, Samson Resources has presence not only in the United States, but also in Canada, Russia, Alaska, and Venezuela.
As we mentioned, in 2015 this organization filed for bankruptcy protection under the Chapter 11, for having more payment responsibilities than it could take. Before assuming the bankruptcy process, Samson Resources sold more than $7.2 billion dollars in assets for having more liquidity, but it did not work because four years later the company was announcing its bankruptcy.
Founded in 1992, this organization faced a bankruptcy process for having debts for more than $1 billion dollars. This organization has been working with fracking techniques, being one of the most important companies using this method in Denver, Colorado. Currently, this organization has almost 1000 employees and is dedicated to the exploration and production of oil and natural gas mainly in the United States.
Related: The influence of the fracking technique in oil prices by Suzzanne Uhland
* Featured Image courtesy of haymarketrebel at Flickr.com