Fossil fuel producers have struggled with financial distress in 2024 with several filing for Chapter 11 bankruptcy.
Electric vehicle manufacturers may have contributed to some of that distress affecting oil companies, as EV new car sales grew by 11% year-over-year in the third quarter of 2024 with a 5% increase compared to the second quarter of 2024, according to Cox Automotive.
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The EV share of new car sales also reached its highest level ever at 8.9% of the automobile market in the third quarter, which was an increase over the same period in 2023 at 7.8%.
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That increase in electric vehicle sales puts more EVs on the road and reduces internal combustion engine use. More EVs means fewer cars needing gasoline, also reducing demand for crude oil.
Oil and gas companies facing distress in recent months include PetroQuest Energy Inc., which has battled liquidity and legal problems. The company filed for Chapter 11 protection for the second time in six years on Nov. 13 with plans to sell its assets.
Drilling services company Independence Contract Drilling filed for Chapter 11 protection on Dec. 2 with a prepackaged reorganization plan that will hand 100% of the company's reorganized equity to its prepetition secured noteholders.
The company cited macroeconomic shifts and trends in the oil and natural gas industries, constraints in the capital markets, and lingering effects of the Covid-19 pandemic for its distress.
Another fossil fuel industry facing distress has been the coal industry, which has been in decline for over 10 years. At least 63 coal companies filed for bankruptcy between 2012 and 2022, ProPublica reported.
The decline in the coal industry has been blamed on falling natural gas prices and a trend toward renewable energy use.
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Coal company files Chapter 11 to liquidate assets
Reduction in demand and supply chain issues led to financial distress for metallurgical-grade coal producer Coking Coal LLC, which provides coal for use in iron smelting and steel fabrication. The company was forced to file for Chapter 11 bankruptcy protection on Dec. 16 with plans to liquidate its assets.
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The Appalachia, Va.-based coal mining company has struggled in recent years due to a decline in demand internationally for metallurgical coal, or Met Coal, which has driven down prevailing market rates and decreased the company's profitability.
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The company's financial distress forced it to obtain a senior loan facility from Tacora Capital in January 2024, but it was not enough to turn the company around.
Major events forced coal company into bankruptcy
Two major events disrupted the company's ability to deliver coal to clients, causing the coal miner to fall behind on payments to its creditors.
The company faced financial distress when the Francis Scott Key Bridge in the Baltimore metro area collapsed in March 2024 after a container ship crashed into the structure. The collapse of the bridge caused delays and severe logistical problems at the debtor's primary shipping port, the debtor said in court papers.
Widespread devastation caused by Hurricane Helene in September 2024 also disrupted Coking Coal's business as the storm flooded the debtor's mines, preventing the company from mining and bringing its coal to market.
The two disasters disrupted the company's ability to generate revenue, and it fell behind on its obligations to Tacora and other creditors.
Unable to manage its debt load and reorganize as a going concern, the debtor filed its petition to conduct an orderly liquidation under Chapter 11, according to court documents.
The debtor listed $50 million to $100 million in assets and $100 million to $500 million in liabilities in its petition.
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