Survey Says Half of Louisiana Oil Producers Heading for Bankruptcy
There is some grim news for the oil and gas industry in Louisiana if you believe the results of a "point-in-time" survey by the Louisiana Oil and Gas Association (LOGA).
First of all, the survey is from LOGA's members, which consists of 450 exploration and production and service companies in Louisiana. It appears the severity of the state's hurting oil production is moving quicker than previously projected.
According to LOGA, the survey yielded the following results:
- Members have been forced to reduce 23% of their Louisiana workforce already
- 77.5% of operators have already begun taking steps to shut-in production
- 97% are moderately or extremely concerned about the future of the industry
- 51.35% said bankruptcy likely
- 34% applied for EIDL funds, of those, only 25% received the funds they expected
- Of those who received funds, 46.67% indicated they were not enough to help them stay in business
- Of those who received funds, 72% indicated they were not enough to avoid layoffs
We've all seen the price of oil recently. Between the glut generated by the Saudis and Russians, and the lack of storage recently, prices closed on West Texas Intermediate are at just under $19 a barrel.
LOGA said in a press released that independent producers need at least $37 a barrel just to break even.
Louisiana Oil & Gas Association President Gifford Briggs had the following to say about the survey.
Our members have indicated they’ve already been forced to lay off 23% of their workforce and the large majority are now taking steps to shut-in production. We feared these outcomes would take place by mid-to-late May, but the crushing weight of the crisis is taking hold much quicker than expected. Without a doubt, we need federal and state policymakers to take immediate action to help mitigate further losses from these extreme market conditions.
According to the Louisiana Workforce Commission, Louisiana's oil and gas industry employs about 33,900 workers operating around 33,650 oil and gas wells around the state.
LOGA is pushing for Louisiana to drastically cut its severance tax rate. This will help ease the loss of revenue.
Currently, Louisiana's severance rate is 12.5%, while Texas has a rate of 4.6%. LOGA is also pushing for relief against government-led lawsuits regarding Louisiana's vanishing coastlines.