A growing number of energy firms are at risk of filing for bankruptcy this year as debt pressure mounts, Deloitte's John England said Tuesday.
Nearly 35 percent of publicly traded oil and gas exploration and production companies around the world — about 175 firms — are at high risk of falling into bankruptcy, the auditing and consulting firm reported. Not only do these companies have high debt levels, but their ability to pay interest on those loans has deteriorated, according to the firm.
"Clearly, this is the year of hard decisions I think for a lot of these companies. They were kind of sheltered in 2015 through hedges and some access to equity and debt markets," England, Deloitte's U.S. oil and gas leader, told CNBC's "Fast Money: Halftime Report."
Those tough choices include selling assets that are core to drillers' portfolios, cutting shareholder payouts, laying off more workers, and further slashing capital spending plans, he said.
Oil and gas companies canceled or postponed about $380 billion in projects between the start of the oil price rout in 2014 and the beginning of this year, according to consultant Wood Mackenzie.
The probability of bankruptcy is high for 50 members of the roughly 175 companies, said Deloitte. That is because their assets are worth less than the outstanding balances on their loans or their leverage ratios have crept into the danger zone.
Some 160 companies are also in danger because, while less leveraged, they are facing cash-flow constraints, Deloitte said.
Those groups include both micro-cap companies and firms with market capitalizations in excess of a billion dollars, England told CNBC.
"There is some larger players that are certainly in that bucket, and I think those are the ones that I think are taking the hardest look right now at trying to shed assets pretty rapidly in an effort to try to meet their debt needs," he said.
England said he believes a wave of mergers and acquisitions activity is now on the horizon.
Wolfe Research senior oil & gas analyst Paul Sankey said Tuesday he expects to see bankruptcies almost daily.
On the other hand, Wolfe is most optimistic about Pioneer Natural Resources, Sankey said, noting that the company remains heavily hedged. The firm also likes Occidental Petroleum on the strength of its balance sheet, he said.
Almost every other company is in trouble at current crude prices below $30 a barrel, including oil major Exxon Mobil, which faces risk to its credit rating, he said.
"Our analogy at these prices is that you've got a landslide of the whole industry basically slipping down the slope, and Exxon's mansion is cracking at the top of the hill," he told CNBC's "Squawk on the Street."