Roughly a third of oil producers are at high risk of slipping into bankruptcy this year as low commodity prices crimp their access to cash and ability to cut debt, according to a study by Deloitte, the auditing and consulting firm.

The report, based on a review of more than 500 publicly traded oil and natural gas exploration and production companies across the globe, highlights the deep unease permeating the energy sector as crude prices sit near their lowest levels in more than a decade, eroding margins, forcing budget cuts and thousands of layoffs.

The roughly 175 companies at risk of bankruptcy have more than $150 billion in debt, with the slipping value of secondary stock offerings and asset sales further hindering their ability to generate cash, Deloitte said in the report, released Tuesday.

“These companies have kicked the can down the road as long as they can and now they’re in danger of kicking the bucket,” said William Snyder, head of corporate restructuring at Deloitte, in an interview. “It’s all about liquidity.”

While 95 percent of oil producers can produce crude for less than $15 per barrel – a testament to cost savings and technological improvements since mid-2014 when only 65 percent of producers could produce near that level – that may not be enough for some, Deloitte found.

Producers are on track to slash budgets again this year, the first time that has happened consecutively since 2016, though many have said prices must rise further to boost profitability.

Some oil producers are also choosing to liquidate hedges for a quick infusion of cash, a risky bet.

“2016 is the year of hard decisions, where it will all come to a head,” John England, vice chairman of Deloitte, said in an interview.

The Deloitte study found that oilfield service providers, which provide staffing and equipment needed to drill wells, are filing for fewer bankruptcies than producers. That is likely due to the larger capital costs – and therefore debt – for producers, Deloitte found.

Of the 53 US energy companies that filed for bankruptcy last quarter, only 14 were service providers, a trend that is expected to continue in the short term, Deloitte found.

“Service providers tend to be more of a people business with less capital deployed, so it’s easier for them to financially flex,” Snyder said. “Eventually, though, they’ve got to run out of gas, too.” (Reuters)

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