Has the U.S. Shale Boom Run Out of Money ?

Growth in U.S. shale 

production has been

slowing significantly, 

and the slowdown 

is accelerating 

this year.

Devon Energy’s 

stock price

is down 20% since 

mid-September; 

EOG Resources

is off 17%, 

and Pioneer 

Natural Resources 

is down 13%.

Rig counts have fallen

20% since last year, 

drilling is down, 

local hotel rates 

are down, and 

employment 

is in decline.

Annualized 

employment 

grew only +0.7% 

in 2019,

through August, 

compared to 

up +11.4%

for the same 

period in 2018. 

The number of

fracking crews 

has fallen to 

its lowest level 

in 30 months.

For the first time 

since 2016, 

Permian shale drillers 

could see their access 

to borrowing slashed.

According to a survey 

of financial institutions, 

and oil and gas firms, by 

law firm Haynes and Boone, 

the industry is set to see: 

“a decrease in credit availability 

for producers and a strong interest 

in alternative sources of capital.”

When the

respondents 

were asked when 

equity markets 

might reopen 

for upstream 

oil and gas 

companies, 

only 25% 

said 2020.

That suggests

most industry 

and financial players 

expect several years 

of restricted access 

to credit for the 

shale industry.

Without capital, 

shale drillers 

will do less drilling, 

and that leads to

lower oil production. 

Bankruptcies 

are likely to 

continue rising. 

From 2015, 

through the end

of September 2019,

there have been 199 

oil and gas bankruptcies 

in North America,

and 2019 is running 

at the highest level 

since 2016.

Recently, small 

shale driller 

Abraxas Petroleum 

announced that it 

would suspend 

drilling operations 

in the Delaware basin.

American Energy

-Permian Basin LLC 

managed to convince 

its creditors 

to restructure 

$2 billion of debt 

that the company 

could not pay. 

Having missed 

an interest payment 

in May 2019,

American Energy 

told creditors 

if they did not agree 

to a restructuring,

the company would 

file for bankruptcy. 

With the WTI oil price

in the low-$50s, 

some companies 

are hovering 

right around their 

break-even levels, 

or losing money.