Energy companies are joining a growing list of struggling companies, says Tony DeMarinis in Financial Post

Canadian Oil, Gas Entities Fight for Their Lives

January 15, 2009

As oil sands developer BA Energy Inc. seeks help from an Alberta court Friday to prevent a fire sale of its assets and to appease nervous bankers, it joins a growing list of Canadian oil and gas companies fighting for their lives amid the credit crunch.

So far, only smaller players have run into trouble, but insolvency experts say the flood of energy companies headed to court will swell if energy prices stay weak.

"If [oil and gas] prices stay at these levels, absolutely you're seeing just the tip of the iceberg and the beginning of a big trend," says Tony DeMarinis. "People forget just how capital-intensive oil and gas companies are, in particular the juniors."

Should a parade of energy companies march toward bankruptcy protection, junior producers and service companies will be at the front of the pack, says Tony, while refiners and integrated companies are better suited to weather the storm.

Energy companies will not be the only ones struggling as the economic crunch continues. Forestry companies, manufacturing concerns and base metals outfits will all be hit. "You can just list company after company," says Tony. "I've never seen anything quite like it."

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