Share:
Oil markets have experienced extreme volatility amid rising concerns over the economic impacts of COVID-19. Oversupply, exacerbated by the recent price war between Russia and Saudi Arabia, has driven commodity prices to fall nearly 70% since the beginning of the year, slumping to their lowest levels since the Great Depression.
As the lingering effects from the oil price war and the challenges imposed by the coronavirus pandemic continue to be felt, it is becoming increasingly clear that the energy industry will likely face substantial headwinds in 2020. As a result, many companies will be forced to restructure, whether through out-of-court negotiations or a Chapter 11 proceeding.
Key focus areas
The following priorities are fundamental for effective crisis management and business continuity planning:
- 1
Focus on near-term liquidity and access to cash
Update and stress-test liquidity forecast
Evaluate financial covenants and engage with lenders
Consider alternative sources of available credit
- 2
Reduce operating costs
Look for opportunities to temporarily reduce costs
Create new performance metrics and reporting to monitor and manage operational efficiencies
Focus on risk management and ensure environmental, health, and safety procedures are not compromised
- 3
Bankruptcy protection
In severe cases (such as failed negotiations with lenders), consider Chapter 11 bankruptcy protection
- 4
Safety Procedures
Ensure the health and wellbeing of employees, customers, and vendors by modifying work and safety procedures
- 5
Limit cash outflows and reduce liabilities
Reduce discretionary capital expenditures
Analyze impact of nondiscretionary capital expenditures and associated costs of noncompliance
Discuss with governmental and state agencies to defer remediation expenditures and temporarily decreased royalties
Renegotiate and extend payment terms on mandatory expenditures, if possible
- 6
Access Liquidity
Access liquidity by selling non-core or underperforming businesses, segments, profit centers, or assets
- 7
Negotiations with Lenders
Restructure debt with out-of-court negotiations with lenders or eliminate service burden
Ready to connect?
Our experienced professionals assist with the challenges and opportunities that companies face at every stage of the business lifecycle. Contact us to discuss how we can help you meet your current and long-term business needs.
Connect with an Expert
Sign Up for the Newsletter
Lorem ipsum dolor sit amet consectetur. At nullam dignissim et facilisis ipsum volutpat dui.
Contact us
Lorem ipsum dolor sit amet consectetur. At nullam dignissim et facilisis ipsum volutpat dui. Velit eu amet odio dignissim nunc nisl.
More Insights
Upcoming Webinar: 2026 Mid-Year Accounting Advisory Update: What Finance Leaders Should Prioritize Now
The TXSE Debuts: What Changes and What Doesn’t for CFOs and IPO-Track Companies
The Case for a CFO AI Lab: Why a Pilot Launch is Better Before a Full-Scale Rollout
