oil company goes bankrupt - loses $2.4 billion

Discussion in 'Current Affairs, News and Analysis' started by Countryman, Jul 24, 2008.

Welcome to the Army Rumour Service, ARRSE

The UK's largest and busiest UNofficial military website.

The heart of the site is the forum area, including:

  1. http://www.wtop.com/?nid=111&sid=577994

    That's got to hurt, a personal debt of $290 million.
  2. At 120p a litre for petrol HOW THE F UCK DOES AN OIL COMPANY GO BANKRUPT!
  3. Just tell him to contact
    Mr G Brown
    10 Downing Street
    He will be delighted to pay the money for him ,
    After all hes great at giving our tax monies to every other ******
  4. Chapter 11 is not bankruptcy, it is protection from debtors while the company reorganises finances (effectively a soft sort of Administration). Courts appoint financiers to investigate the business, assess the level of debt and who they owe it to, and make arrangements to repay the debt (often at small cents to the dollar).

    Chapter 7 is the full monty when a company is wound up.

    In all likelyhood this company is a small scale oil producer, pumping oil from texas or the gulf (there are many of these exploration and exploition companies).

    The price of the product at the pump has no real bearing on profitability of these small scale operators, if their organisation is inefficient, they will not turn profit.
  5. Biped

    Biped LE Book Reviewer

    Oil companies charge less than 45 pence per litre, and overall, they make about 10% profit. The rest is made up in government taxes.
  6. No point doing that. The useless one eyed tw@t is on an 11 week summer recess / holiday.
  7. As an aside, how long before parliament is recalled because of some crisis or another? Even money I would say!
  8. Exactly my thought! Can we count it as a modern day miracle? :D
  9. They backed the wrong horse in the stock market..hence have to pay up..idiots!
  10. company could be under chapter 11 for many years, so its not truely the end of the world for them
  11. Maybe I'm being a biff, but the link in the OP doesn't go to the story quoted. However...

    ... if they've not hedged that punt, they deserve to go under for sheer stupidity!
  12. All the costs of being in business have soared with the price of oil - geologists, geophysicists, divers, steel fabricators are coining it in. An oil company isn't necessarily well placed.

    American bankruptcy amazes me - who are the people so stupid to lend money to US companies (bank debt or bonds) when they know that a wind up and the repayment of debt is either never going to happen or it'll take ages?

    US bankruptcy laws seem like a good idea, but surely what actually happens is that you raise the cost of capital - lenders allow for the possibility of administration when they lend?
  13. How long before the government starts giving millions of pounds to these small scale oil producers to keep them afloat as they did with Northen Rock?

    Millions of pounds of our money, along with the millions of pounds in taxes that they take by making us pay around £1.20 for petrol and £1.31 for diesal!


    :evil: :x :evil: :x :evil: :x
  14. Better to get some money back than none, Chapter 11 is not a comfortable thing for any company to be caught up inside, it usually leads to massive downsizing of the work force, and the stopping of ongoing capital projects. From the investor's point of view its better to get 10c on the $ than nothing at all. If the company survives the Chapter 11 (and many do) the creditors will be offered equity (Guaranteed Bonds) in the remaining businesses, and usually for the larger ones a place on the board.

    From the creditors viewpoint its better to take the long term view. Banks are all too ready to make money (thats their business) and business loans on a recovering company attract significant interest premiums. The banks also administer the company until all loans/debts are cleared, and dictate the shape of the business in its recovery period.

    The main danger is like now when companies end up reaching Chapter 7 insolvency, investors and creditors will only get the remains of the sale of assets once all court and liquidators costs are met. Thats when the lending institutions are at risk of collapse themselves

    Of course if you are an investor or shareholder your shares become cheaper than bogpaper - least thats what I used mine for!
  15. Very easily.

    The company had taken short oil futures positions (i.e betting that crude prices would fall) as a hedging strategy. As that went more and more belly up, the counterparties to the contracts were making bigger and bigger margin calls, which is asking for cash to back up the liabilties these plonkers were running up on the oil Futures contracts.

    They just ran out of cash to pay these margin calls.