The crash of oil prices beginning in late 2014 has led to over 90 exploration and production companies in the United States and Canada filing for bankruptcy over the last 21 months, companies with combined debt obligations well over US$60 billion.
The current downturn has had dramatic effects on exploration and production companies, but it has also had a profound impact on midstream counterparties, and both of their respective debt holders and other stakeholders. In particular, a new shadow has been cast on the rights and obligations under gathering and processing agreements. Midstream companies now feel the dramatic effects of the new hammer wielded by a debtor in a bankruptcy filing. In the latest round of E&P company bankruptcies, some of the E&P companies, to generate more money to pay secured creditors, have used the bankruptcy rejection process to modify uneconomic contracts related to gathering, processing, and transporting oil and gas (midstream agreements) with their midstream counterparties.
