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The 10 Biggest Energy Company Bankruptcies
Submitted by Anfrew Topf via OilPrice.com,
Running a multi-billion dollar energy company isn’t easy. Just ask the executives in the corner suites of some of the energy companies that have gone bust over the years. Some, like Enron, were brought down because of insider malfeasance. A few, like ATP, blamed damaging government policies, while others went off the rails due to market forces that left the company and its shareholders flat-footed, deep in debt, and eventually broke. Here are the bankruptcies that will be etched into the tombstones of failed energy fortunes for time immemorial.
1. Enron. Bankrupt December 2, 2001. Assets $65.5 billion
Enron grew from a simple pipeline company into the world’s largest energy trader by using the Internet to buy and sell natural gas and electric power to help utilities and industrial power users hedge against price fluctuations. By 2000, Enron was worth an astonishing $68 billion, but when the U.S. Securities and Exchange Commission started investigating, it was revealed that much of the money was based on shady accounting practices and un-recorded losses. In one year, Enron’s stock price plummeted from more than $90 to less than $1, resulting in $11 billion in shareholder losses. The subsequent bankruptcy remains the largest in U.S. history. CEO Kenneth Lay and fellow Enron executive Jeffrey Skilling were convicted in 2006 of fraud and conspiracy. Lay died from a heart attack while awaiting sentencing. Skilling is still in prison.
2. Energy Future Holdings. Bankrupt April 29, 2014. Assets $36.4 billion
Energy Future Holdings became the largest power producer in Texas in 2007 after a $45 billion buyout of TXU Corp. But the company struggled under the weight of $40 billion in debt after revenues plunged due to lower prices for natural gas and electricity. Energy Future Holdings was broken up in April under the terms of a restructuring deal.
3. Pacific Gas & Electric Company. Bankrupt April 6, 2001. Assets $36.1 billion
California’s largest publicly-owned utility went bust after deregulation led the company to incur billions in debt. After selling its gas power plants, the company had to buy power from other energy companies. Buying at fluctuating prices and selling at fixed prices led to losses and eventual bankruptcy. But according to Time, wholesale prices eventually dropped, and the day the company emerged from bankruptcy in 2004, its stock was worth three times as much as when it filed for protection.
4. Texaco. Bankrupt April 12, 1987. Assets $34.9 billion
Texaco started out in 1901 as the Texas Fuel Company and was independent for 100 years before merging with Chevron in 2001. However, in the 1980s, Texaco became embroiled in a legal battle with Pennzoil, and ended up owing the company $10.5 billion. That led to Texaco filing for bankruptcy, which at the time, was the largest in U.S. history.
5. Calpine Corporation. Bankrupt December 20, 2005. Assets $26.6 billion
In the mid-2000s, Calpine was the biggest owner of natural gas-fired plants in the U.S. But soaring fuel costs led the company to incur more than $22.5 billion in debt. The subsequent bankruptcy filing followed the ouster of top executives after they lost a fight with bondholders to use proceeds from asset sales to buy fuel. The company received $2 billion in financing to allow it to keep its plants supplying customers.
6. ATP Oil & Gas. Bankrupt April 17, 2012. Assets $3.6 billion
In 2009, ATP Oil & Gas, an offshore oil producer, refinanced $1.5 billion in debt, with the goal of doubling its production to 50,000 barrels a day. Then came the BP Deepwater Horizon disaster. A 2010 moratorium on deepwater operations in the Gulf of Mexico meant ATP was not able to complete wells on its Titan production platform. Forced to spin off Titan and borrow $350 million, ATP spiralled downward, crushed by $2.7 billion in debt obligations. In a Forbes article, ATP’s CEO blamed the Obama Administration and “its illegal ban on deepwater drilling in the wake of the BP disaster,” for the implosion of the company.
7. Patriot Coal. Bankrupt July 9, 2012. Assets $3.6 billion
As the largest producer of thermal coal in the eastern U.S., Patriot Coal was particularly vulnerable to low coal prices, competition from cheap natural gas, a slowing U.S. economy and tougher environmental rules. Patriot Coal lost money every year since 2010, and in 2012 recorded a loss of $198.5 million. To stay afloat during the Chapter 11 bankruptcy process, the company received $802 million from three major banks.
8. James River Coal. Bankrupt April 8, 2014. Assets $1 billion.
Another victim of the U.S. coal downturn, James River Coal declared itself bankrupt in April, 2014, having emerged from a previous bankruptcy in 2004. The company listed $818.7 million in debt after being forced to close a dozen mines. James River Coal was granted a $110-million loan to keep operating under court protection. At the time of the bankruptcy, the company's stock was trading for 36 cents, compared to $60 a share in 2008.
9. OGX. Bankrupt Oct. 30, 2013. Debts $5.1 billion
Darling of Brazilian billionaire Eike Batista, OGX Petróleo e Gas Participações SA filed for bankruptcy protection after failing to reach an agreement with creditors to negotiate part of its $5.1 billion debt. The bankruptcy was the largest in Latin America. The blow to Batista’s mining and oil and gas empire came after disappointing output from offshore wells set off a crisis of investor confidence.
10. Suntech. Bankrupt March 20, 2013. Debts $1.6 billion
The Chinese solar panel manufacturer, one of the world’s biggest, was forced into bankruptcy court after the company missed a $541 million payment to bondholders. The company’s misfortunes were blamed on a glut in the market for solar panels, which collapsed prices. Another solar industry giant, Germany’s Q-Cells, was caught in the downturn the year earlier.
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not easy maybe, but profitable
enron went belly up after building that HUGE power plant in INDIA...
then we started outsourcing jobs to there...
next, GE with its POWER AFRICA...
yeah, thats what that GE commericial is about..
ANYTHING...
this is getting so predicible...
Wait...I thought Enron stock had fully recovered after the last round of QE...Worldcom too, right?
#1 and #3 were related to eachother. Just thought I'd mention that little detail.
What about Solyndra?
Solyndra was a manufacturer of thin-film solar cells based in Fremont, California that received a $536 million U.S. Energy Department loan guarantee before going bankrupt. Under the Solyndra restructuring plan, the government was projected to recoup 19 percent on $142.8 million of the loan and nothing on the remaining $385 million. Additionally, Solyndra received a $25.1 million tax break from California's Alternative Energy and Advanced Transportation Financing Authority. Its top executives were enthusiastic Obama campaign donors. Solyndra had also spent nearly $1.8 million lobbying the government prior to receiving the loan guarantee. The majority of Solyndra funding was provided by the American Recovery and Reinvestment Act.
In September 2011, the company ceased all business activity, filed for Chapter 11 bankruptcy, and laid off all employees, costing taxpayers over $500 million. The company was sued by employees who were abruptly laid off.
http://www.washingtonpost.com/politics/specialreports/solyndra-scandal/
Gotta tell y'all.... Betcha there're a lot of guys levered Way TF up thinking $100+ forever oil is here permanently.
And gonna go down the tubes what with prices where they are.
Lots and lots of folk.
See, this is another example of the memes like peak energy being bought wholesale. Or that water companies during"the coming shortage" are great investments
In 1955, a gallon of gas cost about 25 cents. Now about $3.65.
In each case, that's close to the melt vale of a quarter. Real money. In real money terms, it's not changed. If it was perpetually scarce, it would be priced much more expensively in real terms.
Why not water company investments? They're regulated industries. They cannot and do not price to reflect supply and demand.
Have a nice day
And PS Ebola is transmissible by air.
I still haven't seen a convincing explanation for the drop in the oil price from $150 to $30 in tbe space of a few months in 2008. I bet there is a huge supply stored away from the market in tankers and elsewhere. And the oil futures market is more manipulated than a dick in a porn video.
It's called the Federal Government of the United States. That's who's levered long oil.
They do it by blowing trillions a years in real dollars.
Stick that up yer ass 50 States of the "Union."
You might as well throw in all the fracking companies. Has there ever been a greater flash in the pan scam as fracking?
It's about as bad as Ali Baba, a company that could not even get listed in Hong Kong.
Lehman bankruptcy $690 BILLION
I worked for TXU right when that buyout happened, we all knew it was fucked from the get go. Somehow I think the CEO's $300 million payout played a part in making the deal happen.
Most rational people knew it was a screw job, as well.
Enron was the fist stock I ever bought :)
Just when it was crashing bigtime. Half of my life savings back than, and I thought I could retire in a year :)
Man did I cry like a baby :)
Worldcom was far bigger. No one prosecuted that accounting fraud either...and that was blatant accounting fraud.
Where is the other Bernie these days anyways? Phi kin Canadian phi I.
We got a massive correction going on in the energy space right now? To quote Sarah Palin "you betcha!"
I have total confidence in the ability of the folks about to default on that veritable Mt Everest of debt however that they will still find a way to get oil out of that ground.
I still believe strongly that the COST...let alone price...of oil is heading to a dollar a barrel.
Invest accordingly...
I thought ENRON was a trading company/publicly traded hedge fund ... not an energy company.
It is a shame all those records went down with building 7 so that the trail of fraud and corruption was buried.
AIG?
If you can unwind the numbers, it's either a bankruptcy that generated a +$5B profit or a $85B bankruptcy that outranks Enron.
It's good to be "special."
Endeavour filed bankruptcy last week based upon its US shale and UK North Sea problems. Coal co's are at death's door. Every Solar company is bound for an equity wipe out.
All this with low interest rates.
I hope Bloom Energy disappears so I can stop paying them a $5/month subsidy on my utility bill for who-knows-the-fuck-what.
Iraq: 'ISIS' bombings target Kurds, security, kills at least 58, plus senior police chief - VIDEO http://wtfrly.com/2014/10/13/iraq-isis-bombings-target-kurds-security-ki...
I call horseshit on the ATPG "assets". They were nothing but bullshit and vapor. Somebody should be doing time over that thing.
Enron was not an energy company. It was a Wall St. trading company and CIA "black money" funding and laundering front--a scam.
An American, not US subject.
The CIA's world view is the same as Carroll's Alice:
http://www.ratical.org/ratville/CAH/ultAgent.html
why else would 7 have been the main target
(and if it werent, do you really think they would have pulled it, with there being absolutely no reason whatsoever for it to be compromised to any serious extent, it gave up the entire operation - in light of all that, it had to have been superlatively important, what they buried and destroyed there.)
A lot of people miss your point:
WTC 7 IS the Zapruder film of 9/11, but the fun stuff is all the evidence that was just coincidentally inside and got destroyed. LOL
An American, not US subject.
You could say the same about alot of Hedge funds too...Ren Tech..DE Shaw..etc
I work in the energy markets and can attest to the notion that going forward is going to be very difficult for the current survivors. Also, expect power markets to become regulated again in the next 5 years as that will be the only way generators can cover their costs.
@firstdivision, I agree, we will have reregulation in order to bail out the generators that will be bankrupt. These tax subsidies for renewables have made the problem worse.
I would be interested to hear the OP's (or tyler's) opinion on CHK. I am no CFA, but CHK appears to have $23.6B in total liabilities. Their stock chart is a mess too, which is what caught my attention. That would put them quite high on the list.
I lost a lot of money in Calpine......NRG too....I was 15 years ahead of my time...now those gas fired plants are in big demand...
Energy companies, especially O & G companies, are among the most subject to boom and bust cycles. The Texas housing market over the decades are littered with the causalities of at least tens of thousands of homes and their occupant's financial dreams.
Donning the Captain Obvious cap here.
The "energy miracle" in the US depends on high oil prices to survive. (Non-traditional oil is lower margin / higher production cost oil). By working with the Saudis, in an attempt to weaken Russia, the unintended consequence of lower oil prices is a slew of bankruptcies in the fracking game.
What the administration likely fails to appreciate is that a fracking crisis is a Wall St crisis. The "energy miracle" is largely a product of ZIRP, Wall St ponzinomics, unicorns and energy supply desperation. It has no doubt resulted in crappy energy assets being amplified into 20x more credit through shadow channels and a crash of the underlying will likely therefore have an oversized financial impact as deleveraging is forced to occur -> non-energy bankruptcies (also another reason why ZIRP will linger a little longer than expected).
Blowback's a bitch.
Securitization has led to many things demises.
Enron, USA economy (2008, etc..