President Donald Trump said on Tuesday he has asked his government to come up with a way to inject cash into the ailing U.S. drilling industry to help it survive a historic collapse in global crude oil prices.
The comment comes as oil and gas companies from Texas to Wyoming struggle to stave off bankruptcy amid worldwide stay-at-home orders and business stoppages spurred by the coronavirus outbreak that have obliterated global demand for fuel.
“We will never let the great U.S. Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!” Trump said on Twitter.
U.S. crude oil futures collapsed to trade in negative territory for the first time in history on Monday, as desperate traders paid to get rid of oil amid a dearth of storage space.
U.S. Energy Secretary Dan Brouillette told Reuters last week he was working with Treasury Secretary Steve Mnuchin to roughly double the size-limit on loans available to mid-tier U.S. energy companies under the recently passed CARES Act stimulus package to $200 million-$250 million.
He added he and Mnuchin also planned to work with U.S. regulators and the banking industry to ensure financial institutions don’t discriminate against oil drillers when choosing who they will provide credit to.
The U.S. oil and gas industry is estimated to owe more than $200 billion to lenders through loans backed by oil and gas reserves. As revenue has plummeted and assets have declined in value, some companies are saying they may be unable to repay.
Whiting Petroleum Corp became the first producer to file for Chapter 11 bankruptcy on April 1. Others, including Chesapeake Energy Corp, Denbury Resources Inc and Callon Petroleum Co, have also hired debt advisers.