Texas Energy Companies Need Protection: Fred Zeidman Interview

Texas energy companies need to think protection as oil prices drop and uncertainty increases. For instance, they need to make decisions about their employees, cash flow and debt. And more broadly the continued viability and independence of their business. Our Chairman, Fred Zeidman, yesterday spoke with KPRC 2 and the Houston Chronicle.

Protection of Energy Companies in Texas a Priority

Mr. Zeidman, discusses the potential distress on Houston based oil services companies caused by dropping oil prices and stocks. During this interview, Mr. Zeidman, emphasizes the importance of energy companies seeking independent advice on how to protect themselves. He also discusses how the energy market adapted in the past when oil prices plummeted along with some potential reasons why prices are being dropped this time. Click here to learn about our Energy Restructuring services.

The Houston Chronicle’s article: Would shale survive a bust? asserts that without oil [price] recovery, Houston could lose up to 20,000 jobs. This according to an economist at the University of Houston. And with oil prices remaining at $30 per barrel, companies need to explore options to protect themselves. To do that companies will layoff employees, cut exploration and production. But, the board and management teams will need to look at their liquidity, debt levels. the vulnerability of their creditors and other financial risks. In fact, according to Mr. Zeidman, Wall Street has gone on to greener pastures.

The implication being that Oil and Gas companies must pay their debts and production from cash generated from operations. According to a partner at a local law firm “there’s going to be an awful lot of companies seeking bankruptcy protection […]. He goes on to say “companies have a lot more debt, than they can afford, and now cash flow is cut in half. Many of them are out over their skis”.

RELATED: Energy Sector in a Financial Crisis. Déjà Vu All Over Again | More Mergers and Bankruptcies in the Oil Industry

We at Gordian Group welcome the opportunity to have discussions with oil companies to elaborate further.