A third of oil producers are at risk of going bankrupt this year due to low commodity prices, according to a report by Deloitte.
Around 175 companies may become insolvent as they collectively have more than $150bn in debt and are struggling to obtain financing, according to the study.
"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 reported by Reuters.
"It's all about liquidity.”
The report, released today and cited by Reuters, surveyed more than 500 publicly traded oil and gas companies across the world.
It highlights the mammoth challenges facing the sector, which has been struggling in the face of perilously low oil prices for the past 18 months.
The oil price rout, triggered by Saudi Arabia's 'lower for longer' plan which was aimed at driving out its competitors, has led to major budget cuts and thousands of job losses.
Oil prices, which had climbed six per cent in early trading to above $34 a barrel, pared back their gains after the announcement.