Kevin Peter, Co-Chair of Locke Lord’s Corporate Practice Group and a Partner in the Firm’s Houston office, provided insight to Law360 on the status of oil field service companies that have received Paycheck Protection Program loans from the Small Business Administration amid the COVID-19 pandemic and a prolonged energy industry slump. Peter noted, “Those funds bought some time for the companies to be able to manage their finances and assess what they have, to be able to continue to ride through this energy cycle once these funds are exhausted."
Whether oil field service companies can use their PPP loans to ride out the current downturn depends on their current financial and operational situation, Peter said. He added that companies that are carrying high amounts of bank debt, don't have a broad customer base or operate closer to the well head are likely in bigger trouble. Peter additionally noted, "We're having restructuring conversations with those [companies] and some of those [companies] are actively considering how they survive, and if they survive.”
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