Oil And Gas Bankruptcies
Pump jacks are seen at dawn in an oil field near Lost Hills, California, March 24, 2014. David McNew/Getty Images

Energy company shares are rising this week as oil prices tick upward, but many companies are still feeling the pain of the industry’s nearly two-year downturn.

SandRidge Energy Inc., an early leader in the U.S. hydraulic fracturing boom, this week became the fifth energy company in five days to file for bankruptcy protection.

The Oklahoma City-based driller, which holds 1.85 million acres of leasehold rights in southern Kansas and northern Oklahoma, said Monday it reached an agreement with creditors to swap $3.7 billion in debt for control of the company. The plan, which still requires court approval, should allow SandRidge to emerge quickly from bankruptcy and continue oil and gas development in Oklahoma and Colorado, the company said in a statement.

SandRidge’s filing is part of a growing wave of corporate restructurings in a sector that continues to suffer from the collapse in oil prices. Some 77 North American energy companies have declared bankruptcy protection since the start of 2015, months after oil prices plunged from a peak of more than $100 a barrel in June 2014 and began dragging down balance sheets, Houston law firm Haynes & Boone LLP said in its oil patch bankruptcy monitor.

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Dozens more U.S. energy companies are in danger of declaring bankruptcy this year, the analysts said, even though the price of crude has rebounded in recent days. West Texas Intermediate, the U.S. benchmark, was trading above $48 a barrel early Tuesday in response to major supply disruptions in Canada and Nigeria.

Most of the energy firms facing financial strain are small and midsize U.S. shale producers and service companies, which expanded rapidly in the last decade thanks to a flood of cheap debt from Wall Street and the rise of advanced technologies such as fracking and horizontal drilling. But as crude prices plunged over the last 18 months, much of that drilling activity became unprofitable, making it harder for companies in states like Oklahoma, Texas and Pennsylvania to both pay down their debts and keep rigs running.

Along with SandRidge, Linn Energy LLC, Berry Petroleum Co., Penn Virginia Corp. and Breitburn Energy Partners LP all filed for bankruptcy protection in recent days. A subsidiary of American Energy Partners LP, a firm formerly led by the late shale pioneer Aubrey McClendon, has defaulted on a $450 million loan, people familiar with the situation told the Wall Street Journal.

“Keep an eye out, there’ll be more [bankruptcies],” said Charles Beckham Jr., a law partner at Haynes & Boone, the Journal reported. “For the industry it’s kind of a dreadful watch.”

Natural gas is flared at Apache Corp.'s operations in the Permian Basin near Garden City, Texas, Feb. 5, 2015. Spencer Platt/Getty Images

SandRidge’s financial woes aren’t the only challenge it's facing. The company is facing a public relations challenge after its founder and former CEO Tom Ward was linked to a corruption scandal involving McClendon, the former CEO of Chesapeake Energy Corp.

The U.S. Department of Justice indicted McClendon in March on a charge of conspiring to rig bids for crude oil and natural gas leases while at Chesapeake from late 2007 to early 2010. McClendon co-founded Chesapeake in 1989 with Ward, who later left to create SandRidge in 2006. The company went on to become a leading shale producer with a market capitalization of more than $11 billion.

McClendon, who denied the charges, died a day after the indictment after driving his sport utility vehicle into a concrete viaduct in Oklahoma City. Ward, now the CEO of Tapstone Energy LLC, has declined to comment on any legal matters that might involve himself or McClendon.