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ARTICLE · 25 MARCH 2020

Five Things To Think About – Analyzing Liquidity And Planning For Challenges

A&O Shearman
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The oil price plunge starting on March 6 seems like a sucker-punch to the oil and gas industry after the price decreases and market unrest as a result of COVID-19.

United StatesEnergy and Natural Resources
A&O Shearman
A&O Shearman
John Nathanson
John Nathanson
Luckey McDowell
Luckey McDowell
Ian Roberts
Ian Roberts
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The oil price plunge starting on March 6 seems like a sucker-punch to the oil and gas industry after the price decreases and market unrest as a result of COVID-19. Oil and gas companies and companies that contract with them should analyze their current liquidity situation and plan for future challenges before options are limited. Below, we highlight five things to consider in connection with such analysis. Our energy team is experienced in these issues and invites the opportunity to discuss them with you and answer specific questions you may have.

Solvency and Liquidity

Oil and gas companies must analyze their positions with respect to both solvency (the ability to sustain operations long-term) and liquidity (the ability to meet short-term and current obligations). A mistake many companies make is waiting until there are serious liquidity issues to analyze options and take action. The time to act is now and there are real advantages to being proactive when faced

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