Restructuring was the hot topic of the day, and Steven shared what he sees as the key trends to be aware of in today’s low price environment:
4 Key Takeaways
Chapter 11 filings will continue in the energy sector due to the cumulative impact of lower prices on balance sheets and regulatory pressure on traditional lenders to limit sector credit exposure.
Credit dislocation arising from regulatory pressure on traditional lenders (which are a primary source of capital to the industry) is a main driver of restructuring activity. Even though alternate sources of capital such as private equity and non-traditional lenders are trying to fill the liquidity gap left by traditional lenders, these alternate sources are typically much more expensive and sometimes viewed as challenging to deal with.
Oilfield services companies, (particularly those specializing in offshore activity), E&P companies with high cost structures and companies with international capital commitments for drilling are among the most vulnerable sectors.
There continue to be attractive investment opportunities for firms combining a distressed investor mentality and a strong understanding of operations – notable areas include acreage acquisitions and direct lending for development purposes.