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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region Forums2016 Brings More Pain To U.S. Shale Companies As Crude Sinks
Pain is quickly growing more acute in the new year at beleaguered U.S. shale companies as a global supply glut sinks crude further to 11-year lows, putting added financial stress on the most heavily indebted.
Debt and equity investors have all but given up on the exploration and production sector as oil prices tumble lower. In the last year, the SIG index of oil companies .EPX fell 42 percent, compared with a 0.6 percent decline in the Standard & Poor's 500 index .SPX.
SandRidge Energy Inc (SDOC.PK), a once high-flying Oklahoma-based shale company backed by billionaire investors Leon Cooperman and Canada's Prem Watsa, was delisted by the New York Stock Exchange on Wednesday. The stock last traded on the NYSE for less than 20 cents a share.
Though companies ended 2015 with enough cash on hand to cover interest payments for well into next year, they cannot afford to drill new wells. The gloomier outlook is expected to prod more of them to restructure and give up on trying to ride out a downdraft showing no signs of abating soon.
Oil CLc1 is down 10 percent since Dec. 31 to $33 a barrel, falling away from the crucial $50 to $60 level that many shale companies need for long-term survival.
"You are going to see a lot more bankruptcies and restructurings this year," said Bill Costello, an energy analyst at Westwood Holdings Group Inc. "This year is going to be much worse for companies with weak balance sheets."
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http://www.reuters.com/article/us-oil-outlook-debt-idUSKBN0UM2EF20160108
TransitJohn
(6,932 posts)tens of thousands of people out of work, and billions of less dollars spent. On the 'bright' side, at least our money will begin flowing out to the Saudis again, soon.
tecelote
(5,122 posts)compared to the profits, eh?
We have other methods and the US has huge reserves.
Plus, even with the goldmine we found in shale, we still buy from the ME despite the poisoning of our country.
TransitJohn
(6,932 posts)More concerned about Americans earning money.
tecelote
(5,122 posts)That's why we should be investing in alternative energy.
Keeps the Middle East out of the equation and employs more Americans. Just look at the solar industry.
silverweb
(16,402 posts)[font color="navy" face="Verdana"]We have to quickly phase out our use of fossil fuels for the health of all and to stop further environmental devastation.
Great point and graphic.
Rex
(65,616 posts)You pretend it just started with fracking? Give me a break already.