|Abstract||This study set out to determine the impact of leverage on E&P companies. It looked at how the weight of debt in E&P companies' capital structures affected their overall systematic risk to the market and to commodity prices. It also examined the impact of the commodity price shock of 2014 on the industry's capital structure. It looked specifically at how companies in the industry responded to the collapse in prices to see if an optimal capital structure or a target amount of risk presented itself. The study concluded that the more debt an E&P company employs in their capital structure, the more systematic risk they face relative to both the market and oil prices. It also concluded that the price shock had a significant impact on E&P companies' capital structure. However, the study was not able to identify a target capital structure in the industry. Overall, knowing that volatility in the oil and gas market is always around the corner, upstream oil and gas companies should take a more conservative approach when managing their capital structures.