"Their owners may be bankrupt, but the sprawling mines of Wyoming’s Powder River Basin are still churning out coal. It is the same story in oil fields along the Gulf Coast and with shale-gas wells in the Rocky Mountains.
Energy investors have long hoped that falling prices would solve themselves by driving producers into bankruptcy and stanching the flood of excess supply. It turns out that while bankruptcy filings are up, they have barely impacted fossil-fuel markets.
About 70 U.S. oil and gas companies filed for bankruptcy in 2015 and 2016. They now produce the equivalent of about 1 million barrels a day, about the same as before they declared bankruptcy, according to Wood Mackenzie. That represents about 5% of U.S. oil-and-gas output."
"That resilience has kept energy inventories flush and prices capped. Oil shot to $50 a barrel this summer, but has had trouble making much progress beyond that mark. On Friday, oil futures in New York rose 0.4% to $50.85 a barrel.
The theory that bankruptcies would help balance the market “was misguided to begin with,” says Roy Martin, a research analyst at energy consultancy Wood Mackenzie. “And people are starting to come around to that now.”
This is exactly the way chapter 11 was meant to work. The process is designed to save companies that can be saved, and many energy companies are using it to lighten their heavy debt loads, adapt to lean times and keep producing."
"Bank lenders, reluctant to actually take ownership of assets that have been used as collateral by borrowers, have been friendly to troubled companies. During bankruptcy, Halcón, SandRidge, Goodrich and Penn Virginia raised a combined $1.3 billion in debt, largely reaffirmed credit lines from their banks."
"Coal magnate Robert Murray in 2014 correctly predicted that his rivals would file for bankruptcy. He pushed his Murray Energy Corp. to take advantage of the opening with a two-year buying spree fueled by $4 billion in debt. By this summer, Mr. Murray was negotiating with lenders, customers and workers on a multipoint plan he needed to avoid his own company’s bankruptcy.
His miscalculation: that his rivals’ bankruptcies would force them to cut back. If they maintain production, “that pulls everyone into what I call the bankruptcy sewer,” Mr. Murray said. “These are zombie coal companies chasing the ghosts of past markets.”"
And in further zombie news, see Do Zombies Pay the Estate Tax?:‘A zombie apocalypse will create an urgent need for significant government revenues to protect the living’ also from the WSJ:
"From the abstract of a 2012 paper by Adam Chodorow, a scholar at Arizona State University, published in the Iowa Law Review:
The U.S. stands on the precipice of a financial disaster, and Congress has done nothing but bicker. Of course, I refer to the coming day when the undead walk the earth, feasting on the living. A zombie apocalypse will create an urgent need for significant government revenues to protect the living, while at the same time rendering a large portion of the taxpaying public dead or undead. The government’s failure to anticipate or plan for this eventuality could cripple its ability to respond effectively, putting us all at risk.
This article fills a glaring gap in the academic literature by examining how the estate and income tax laws apply to the undead. Beginning with the critical question of whether the undead should be considered dead for estate tax purposes, the article continues on to address income tax issues the undead are likely to face. In addition to zombies, the article also considers how estate and income tax laws should apply to vampires and ghosts. Given the difficulties identified herein of applying existing tax law to the undead, new legislation may be warranted. However, any new legislation is certain to raise its own set of problems. The point here is not to identify the appropriate approach. Rather, it is to goad Congress and the IRS into action before it is too late."