UNIT OIL СOMPANY DECLARES BANKRUPTCY

The problems of the American shale oil business have been obvious for a long time – the experts have repeatedly warned of the threat of a massive decline in the US oil producers’ activity. Another proof of it is a collapse of the Unit Company that has filed for bankruptcy in court.

The head office of the oil company is located in Tulsa (Oklahoma), but the company has sent a request to a judge in Houston (Texas). The company has publicly stated that the crisis has forced top management to lay off about a third of the employees (almost 300 people).

According to the official figures, the company has accumulated long-term liabilities of $ 650 million.

And although the company does not plan to leave the market completely, the developed plan for the reorganization and restoration of the financial well-being requires the procedures, provided by the Chapter 11 of the US Bankruptcy Law.

The experts note that the Unit oil producer was one of the victims of the situation, which put an oil refining industry of the United States on the brink of survival. Unprofitable oil production in the conditions, when the prices fell below $ 21-25 per barrel on March 18, can be called one of the reasons for the bankruptcy of such companies as Unit.

One cannot fail to mention the events that occurred on April 20 on the New York Mercantile Exchange. The price of the Texas light oil then became negative, which is why the May deliveries had to be carried out with a surcharge of $ 40 per barrel. Most likely, this fact will go down in the history of the US oil refining industry as a “Black Monday”, during which a control shot was made on the business of many shale enterprises.

Will the reorganization upgrade the Unit business? Perhaps the agreement, reached on April 12 by the OPEC + countries, will make it possible to improve the situation.

The decline in production in May-June by almost 10 million barrels per day, as the experts say, can subsequently bring positive results. However, a lot depends on how the world economy will recover and, above all, the economies of those countries that are the main consumers of the “black gold”.