Turmoil in Canadian oil and gas due to coronavirus pandemic

The Canadian oil patch is facing a $6 billion refinancing stimulus over the next six months, according to the Bank of Canada, after the industry borrowed heavily in recent years in order to survive a series of catastrophes.

Reuters has published a piece discussing the unprecedented amount of debt both oil patch giants and smaller players are facing. The article highlights the descent of Calfrac Well Services, whose market value has plummeted from $2.1 billion to $23 million since 2014.

LISTEN: Hear from Torys lawyers on the key issues emerging in the Canadian oil and gas sector amid COVID-19 on Torys Business Brief.

Calgary Partner Kevin Fougere spoke with the Reuters about the maturing energy debts which have seen a 40% rise since 2019. He offered two solutions to overcome this: swap debt for equity, or convince noteholders to extend maturity.

Kevin also said that in the interim, lenders are deciding how flexible they should be by evaluating their confidence in management teams and calculating operating costs, but he noted that “the banks will determine who the winners and losers are.”

The piece was also published in the New York Times, CBC, Financial Post, Daily Oil Bulletin, Nasdaq, Energy Times, This is Money, FR24 News, Yahoo Finance and Investing.com.

Get more written analysis from our Calgary practice on the future of Canada’s oil and gas sector in “What’s next for Canadian oil and gas as COVID-19 adds to existing challenges”.

You can find all our oil and gas insights and analysis on our practice page.