Fewer ‘zombie’ companies are chasing the energy sector today as the industry recovers from the collapse in demand caused by the pandemic.
The number of US energy companies to cover interest expenses fell to 78, from 82 in the last round of results, data compiled by Bloomberg shows. Pipeline operators such as Kinder Morgan and Targa Resources, and shale explorers such as CNX Resources and Comstock Resources, were among those that left the list.
Due to the impact of the drop in oil prices last year, the energy sector has the The group, which includes giants like Chevron and Exxon Mobil, still represents about 70% of all oil and gas companies in the Russell index. 3000. But the worst appears to be over for the industry, as the economy emerges from the pandemic, fueling a rebound in demand that has helped restore earnings and cash flow.
Zombie companies get their nickname due to their tendency to limp, unable to earn enough to get rid of their financial obligations, but still with enough access to credit to roll over their debts. Sometimes they are a drag on the economy, because they keep assets immobilized in companies that cannot afford to invest and develop their businesses. However, not all companies that become a zombie are destined to remain so forever.
Kinder Morgan, for example, fell off the list after posting a record first-quarter profit on highly profitable natural gas sales during the historic winter storm that hit Texas. The company, which operates an extensive network of oil pipelines and fuel terminals, aims to post nearly $ 4.5 billion in operating profit this year, more than double that of last year, according to average analyst estimates compiled by Bloomberg. Exxon and Chevron are also expected to generate profits that are more than enough to pay off their debts.
