U.S. shale producers shouldn’t worry about banks abandoning them as their businesses come under pressure amid oil price volatility, says Birchcliff Energy Ltd. CEO Jeff Tonken. 

“In a situation that we are in today, the banks are not going to move in on these companies and say: ‘Ok you’re done,’ because nobody will be around to buy it,” Tonken said in a television interview with BNN Bloomberg Thursday.

The price of crude has remained under pressure this week in the wake of an escalating price war, leading key energy players in both Canada and the U.S. to revise their capital guidance.

Birchcliff joined Meg Energy and Seven Generations in cutting its capital spending plan on Wednesday, while Apache Corp. announced Thursday that it will reduce its quarterly dividend by 90 per cent.  

Oil prices plunged Monday when Saudi Arabia launched a price war after last week’s OPEC+ meeting ended in disarray as Russia refused to collaborate on proposed deep production cuts.

The Saudis’ decision to ramp up production and offer discounts to customers prompted sharp declines, which also raised concerns about the economic outlook for Canada’s oil-and-gas sector.

Tonken anticipates that some U.S. energy companies will file for bankruptcy amid the turmoil, but he’s optimistic that the banks will help them weather the storm. Meanwhile, he noted Canadian energy companies typically carry less debt.

“I expect you will see a lot of these companies work with their banks and work out a scenario where everyone survives,” Tonken said.

Tonken is also confident the dive in oil prices is only a short-term issue.

“Oil prices have been cut in the short term due to fluctuations in demand and the price war between Saudi Arabia and Russia,” he said.

“Demand will come back. People just need to take a deep breath.”