Times are tough, very tough, for many mid-cap and small-cap exploration and production (“E&P”) companies. Crude oil prices have fallen from more than $100/barrel in July 2014 to a twelve-year low of less than $30/barrel in January 2016. Natural gas prices are at a three-year low. The growing consensus is that depressed prices will experience a slow recovery that may continue into the 2020s. In response, a number of overleveraged E&P companies have completed significant out-of-court restructurings since 2015, while others have filed for bankruptcy protection. Even those companies that have deleveraged their balance sheet and reduced their overall interest expense may face a liquidity crisis if commodity prices remain depressed through 2016 and beyond.

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