By

Matt Jarzemsky and

Matt Wirz

Updated Aug. 3, 2015 6:58 p.m. ET

6 COMMENTS

It is shaping up as a cruel summer for debt investors wagering on a rebound in the oil-and-gas business.

Funds managed by Franklin Resources Inc., Blackstone Group LP and Oaktree Capital Group LLC, among others, are facing paper losses on substantial investments this year in exploration-and-production companies. The sector is coming under further pressure as oil prices have turned downward again, dropping below $46 a barrel in New York to a four-month low.

Many of the investments amounted to a doubling down on existing stakes, as the firms committed hundreds of millions of dollars to lend to or invest in energy companies whose debt they already held. Among those gaining access to much needed cash: Warren Resources Inc., Goodrich Petroleum Co. and Energy XXI Ltd.