Close up of bankruptcy petition

The Bakken shale, found in North Dakota and Montana, used to be one of the hot spots for oil companies in the United States. However, they've lately started declaring bankruptcy, suggesting that the boom may be over. The most recent company to put in the filing is Emerald Oil.

A Potential Bid

According to reports, a preliminary bid -Ñ called a Òstalking horseÓ bid -Ñ may already have been made. No terms have been given out yet, but Emerald said it had such a bid from Latium Enterprises. This is a non-binding bid that could have many different terms connected to it, so there appears to be a long way to go before anything would realistically happen with a sale.

The Reason for the Filing

Emerald put out a press release to tell consumers more about why they filed for bankruptcy, and they named a number of common factors. First and foremost, the dropping oil prices have harmed the company's ability to earn consistently. The fact that these prices have stayed low -Ñ along with the prices for natural gas -Ñ also hurt; the company could perhaps have weathered a small drop and recovery, but consistently low prices proved too much.

The impact on stock prices has been clear. Over the last 52 weeks, the prices have been all over the board, with a low of just $0.39 and a high of $19.00. Most recently, they were actually trending up a bit, but they still only sat at $1.37.

Bankruptcy is becoming common in this industry, at least when looking at the Bakken shale. Samson Resources, Magnum Hunter Resources, and Swift Energy have already declared bankruptcy, setting the trend that Emerald is following.

The Impact

This is clearly a significant event for investors in the oil and gas industry and for Emerald's investors in particular. The company would like to restructure, so it will be worth watching the stock prices to see if they rebound.

When looking at bankruptcy options, it's important for company owners to know about restructuring plans and debt reorganization, as bankruptcy does not always have to mean the end of a company.

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