Bankruptcies in the exploration and production sector have continued to accelerate this year and could climb past 2015 levels, according to a report by Moody’s Investors Service.

The report, published on Tuesday, found that the number of defaults in the E&P sector could be on par with the telecommunications bust in the early 2000s.

Moody’s recorded 17 oil & gas bankruptcies in its Ultimate Recovery Database in 2015 with 15 of those being filed by E&P firms, one from an oilfield services firm and one from a drilling firm.

Despite oil prices climbing back near the $50 per barrel mark, the report found that E&P bankruptcies have accelerated in 2016.

Moody’s found that the number of E&P bankruptcies has nearly doubled year-over-year since 2015.

The number of oil and gas defaults could wind up trumping the 43 company bankruptcies Moody’s recorded for the three-year period between 2001 and 2003 during the telecom bust.

“When all the data is in, including 2016 bankruptcies, it may very well turn out that this oil & gas industry crisis has created a segment-wide bust of historic proportions,” Senior Vice President at Moody’s David Keisman said.

Firm-wide recovery rates for the E&P bankruptcies averaged only 21 percent in 2015, “significantly lower than the historical average” of 58.6 percent for all E&P bankruptcies filed prior to 2015, according to the report.

The report also found that reserve based loans on average recovered 81 percent, “significantly lower” than the 98 percent recovered in prior energy E&P bankruptcies from 1987 to 2014.

That reduction was in line with an overall dip in average recovery levels tied to other bank debt instruments compared to previous bankruptcies.

The report also noted that distressed exchanges did little to help companies avoid default.

According to Moody’s, more than half of the E&P companies that completed distressed exchanges still filed for Chapter 11 bankruptcy protection within one year.

Debt levels in the oil gas sector have been surging amid two years of low commodity prices.

According to data collected by Bloomberg, oil majors have seen their debt burden double to $138 billion over the last 16 years while the world’s top five oil firms have seen their net debt rise tenfold since 2008.

A report published by law firm Haynes and Boone earlier this year found that 90 North American oil and gas producers filed for bankruptcy since the beginning of 2015.

Thee bankruptcies, including Chapter 7, Chapter 11, Chapter 15 and Canadian cases, involve about $66.5 billion in cumulative secured and unsecured debt.

Forty eight producers have filed bankruptcy so far this year as of the start of August, representing $49.3 billion in cumulative secured and unsecured debt.

Patrick Hughes of Haynes and Boone told the Financial Times on Monday that lenders may become less willing to keep companies afloat if default seems likely.

“We are reaching the point where kicking the can down the road and waiting for prices to rise is no longer an option,” Hughes told the paper.


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