(The Fuse) In 2015, almost 40 oilfield services companies, with more than $5 billion in debt, went bankrupt. More are expected this year.

While bankruptcies among independent shale producers have received the most attention , the oilfield services sector is in dire straits. The carnage from the low oil price in the shale patch has been widespread, with companies that provide technology, transportation, and supplies to producers getting slammed. In 2015, almost 40 oilfield services companies, with more than $5 billion in debt, went bankrupt, according to law firm Haynes and Boon. More are expected this year. Since oilfield service companies are the firms that actually do the drilling, the sector has been hit particularly hard by the roughly 70 percent decline in the rig count since the second half of 2014. With oil companies cutting back on current and future capital expenditures, there is less activity for oilfield services. As more upstream projects are deferred and cancelled, oilfield services companies will go deeper into the red, or possibly bankrupt.

(The Fuse) It’s been mostly small players who have filed for bankruptcy, but there have been some large firms that have gone under. The two biggest bankruptcies last year were Hercules Offshore and Vantage Drilling Co., with debt of $1.3 billion and $2.77 billion, respectively. The biggest players in this sector include Baker Hughes, Halliburton, and Schlumberger, all of whom reported major losses for the fourth quarter, with their North American activity getting hit more so than international operations amid the decline in U.S. shale output. While they are not in danger of going bankrupt, their performance reflects how the pain from low oil prices has affected both small and large players. Other major firms in this space include National-Oilwell Varco, Cameron, and FMC Technologies. They all have their problems, too. Analysts at Howard Weil recently revised its price target for National-Oilwell Varco by almost 30 percent , while Cameron is merging with Schlumberger. FMC Technologies, meanwhile, has seen its stock fall by 22 percent since the beginning of the year.

More pain to come with low oil prices, fall in production

The outlook for producers is grim, and this will ripple through the rest of the industry. Last year, more than 40 filed for bankruptcies and bigger ones are expected this year. In other words, the bloodbath has only begun. But even though some may manage to avoid going bankrupt, their cash flow […]