There is no doubt that oil companies are currently struggling. For almost a month now, oil stocks have been dropping repeatedly. This, of course, has taken a toll on financial markets. Profits for all sorts of energy companies went down, and the stock market immediately followed. There was a definitive crash in the price of oil, and oil companies are suffering. They are now attempting to combat this drop in profit by selling stock as quickly as they can.

This tactic is in response to their growing fear. Cheaper prices of oil have already forced companies to lay off workers and use other extreme methods to stay afloat financially. There is a real terror around going bankrupt in all oil companies, since oil stocks keep dipping, and companies hope that quickly selling their stocks will provide them with enough cash to remain stable.

United States oil companies have managed to sell more new shares at this point in the year than they have sold in over 20 years. Over 15 oil companies have taken part in this mass stock sale. For example, Marathon Oil very recently joined this trend and raised over 1 billion dollars by selling its stocks. It seems that selling stocks has the ability to keep oil companies out of bankruptcy for now, but it is unclear how sustainable this tactic is.

Oil and gas companies, when they were doing well, were allowed to borrow large sums of money from investors, meaning that most of the companies are still in debt. It is no surprise that the percentage of oil companies declaring bankruptcies spiked recently. Experts do not believe this will change in the near future, either.

Unfortunately, no matter how unsustainable, selling stocks is the only option for struggling companies currently. There are limited ways for such organizations to raise money, and this is the most viable. The companies could also, for example, begin to sell their assets, but there is no demand. Investors who have had money in the companies for a long time are not happy, either, but selling stocks may just save their investment.

The reason investors are displeased is because, the more stocks sold, the more their shares in the companies shrink. However, they must understand that their shares would be nonexistent if the company were to go bankrupt.

The fact that oil companies are able to raise billions of dollars by mass-selling their stocks is promising for the market. Hopefully, oil stocks will stop struggling soon and more company bankruptcy will be prevented.