Great American Shale Oil & Gas Bust -- 402 bankruptcy filings since 2015

Previous articles

on the industry: 

October 13,  2019:

" Has the U.S. 

Shale Boom 

Run Out 

of Money ? "
https://el2017.blogspot.com/2019/10/has-us-shale-boom-run-out-of-money.html

November 26, 2019:

" The "Fracking Industry" 

is a Cash Burning Machine 

-- the Great American 

Shale Oil and Gas Bust ! "
https://el2017.blogspot.com/2019/11/the-fracking-industry-is-cash-burning.html

Recent article

on flaring gas
CO2 emissions: 

January 6, 2020:
"Evil" Permian basin drillers ? 
Natural gas venting and flaring 
is harmful to the environment
https://elonionbloggle.blogspot.com/2020/01/evil-permian-basin-drillers-natural-gas.html

Note:

U.S. shale oil & gas 

bankruptcy data 

were compiled 

by the law firm 

Haynes and Boone.

A sharp rise of bankruptcies 

followed the fall of oil and 

natural gas prices in  2016.

It's deja vu all over again !

Bankruptcies by exploration 

and production companies, 

oilfield services companies, 

and “midstream” companies 

( who gather, transport, process, 

or store oil and natural gas ) 

jumped by +51% in 2019, 

over 2018, to 65 filings

2019 bankruptcies 

involved $35 billion 

of debt, double of 2018. 

Total debt 

listed in these 

bankruptcy filings,

since 2015, 

was $207 billion. 

Shareholders lose 

most of their money 

in the years BEFORE 

bankruptcy.

Shares often 

become worthless 

after bankruptcy.

Unsecured 

bondholders 

usually take 

very big losses.

Secured 

bondholders 

usually take

large "haircuts", 

or their debt is 

converted 

to equity, 

which will be 

of little value 

if the 

restructured 

company 

later files 

for bankruptcy.

The banks 

generally have 

the best collateral, 

so they take 

the smallest losses.

The Great American 

"Fracking Bust" 

started when the price 

of WTI crude oil dropped 

from over $100 a barrel 

to below $30 a barrel 

by early 2016. 

The price 

recovered, 

going over 

$70 a barrel 

in September and 

October 2018. 

By the end of 2018, 

WTI had dropped 

back to $47 a barrel.

The Iran attack 

on Saudi Aramco’s 

oil facilities, 

in September 2019, 

and US killing

of Iranian terrorist,

Major General 

Qasem Soleimani, 

only caused brief 

oil price spikes.

$60 a barrel oil will not 

support the industry.

2020 started 

with the price 

of natural gas 

plunging to $1.90 

per million Btu.

Producers 

in shale fields 

that produce 

mostly gas, 

such as the 

Marcellus, 

are in BIG 

trouble.

The Permian,

located in Texas 

and New Mexico, 

is the most prolific 

oil field in the US.

Natural gas is a 

byproduct of 

oil production.

Limited pipeline 

takeaway 

capacity 

has caused 

local prices 

to collapse, 

so the gas

 is "flared" off

( burned at the site ), 

polluting the air.

TEXAS

Texas is the the 

largest oil producer 

state in the US.

And most affected 

by bankruptcy filings.

Texas had 207 

oil-and-gas 

bankruptcy filings 

since 2015, 

over half of the 

402 total US filings. 

Texas had 

30 of the 

65 US filings 

in 2019.

Below are 

the eight states 

with the most 

oil-and-gas 

bankruptcy filings 

since 2015.  

Note that 

many Texas 

shale companies 

are incorporated 

in Delaware, 

so they file 

for bankruptcy 

in Delaware. 

( Ignore Delaware ):

Bankruptcy filings 

are triggered 

when companies 

can no longer 

get funding 

from Wall Street, 

or from their banks,

 to continue their 

negative cash-flow 

operations. 

Wall Street ,

and the banks,

have started 

to demand 

these companies 

live within their 

internal cash flow.

That won't happen 

-- oil and natural gas 

prices are too low !

A lot more 

bankruptcies 

are expected.

Bankruptcies 

could reduce 

production

enough to

support 

higher 

prices.

But then new 

investments 

will eventually

cause a new 

production 

surge, 

collapsing 

oil and gas 

prices again.