NEW YORK (Bloomberg) --One of the key sources of funding for American shale is evaporating, just as the the sector needs it more than ever.
Banks lending against the oil and natural gas reserves of hundreds of independent U.S. drilling companies have pulled back from the sector at an unprecedented rate this year after energy prices slumped. There’s every indication they’re not done: Many in the industry expect further reductions to credit facilities in the fall, with higher costs and more stringent protections for lenders.
All that comes at a time that could scarcely be more challenging for shale. Weakened by poor returns to shareholders, it was getting shut out of the bond and equity markets even before the Covid-19 pandemic decimated global demand. With crude prices staging a limited recovery in the last two months to around $40 a barrel, shale operators face an uncertain future, one where they must to drill to generate cash flow while facing a higher cost of capital.
“As long as oil prices stay at $40 or less and gas stays at $2 or less, I think banks are going to continue to be very cautious and continue to pull back,” said Spencer Cutter, an analyst at Bloomberg Intelligence. “It’ll be the end of shale if oil stays below $40.”
HOUSTON (Bloomberg) --America’s most prolific shale drillers are accepting a fate once anathema to an industry obsessed with growth: Drilling just to ward off production drops.
The pandemic and subsequent plunge in crude prices has forced U.S. crude explorers to scrap plans to expand supplies amid investor skepticism toward the shale business model. For some of the biggest names in the Permian, that’s meant vowing restraint as long as oil lingers at levels too poor to justify a new boom.
The pledges also come on the heels of the worst crude crash in the 161-year history of the petroleum industry. Explorers are disclosing just how deeply their balance sheets were wounded by a quarter that included the heretofore unheard-of phenomenon of negative prices.
“These guys have all just had a near-death experience,” said Raoul LeBlanc, an analyst at IHS Markit Ltd. “It will take some time to get themselves back in a a better position.”
HOUSTON (Bloomberg) --Three shale explorers signaled a grim rest of 2020 for the U.S. oil patch just hours after President Donald Trump arrived in the Permian Basin championing “American energy dominance.”
In second-quarter earnings reports published after the close of trading in New York, QEP Resources Inc. cut its production outlook, WPX Energy Inc. further reduced its capital spending budget, while Concho Resources Inc. stuck with plans to keep crude volumes flat from 2019 levels, ending years of growth. QEP shares dipped as much as 20%.
It’s a downbeat reality check for the industry, which is emerging from the worst oil price crash in a generation and another sign that the decade-long, debt-fueled surge of production growth is over.
https://www.worldoil.com//news/2020/7/30/quarterly-losses-are-a-reality-check-for-shale-producers
HOUSTON (Bloomberg) --Halliburton Co. is looking away from its traditional North American heartland for sales growth as the fracking behemoth works its way through an historic oil bust.
Shares for one of the world’s biggest oilfield service providers surged more than 8% on Monday after it posted $456 million in second-quarter free cash flow -- more than double expectations. Halliburton also told investors it’s charting a “fundamentally different course” after slashing jobs and the dividend in recent months.
“As oil demand recovers, I expect the international business will continue to be a more meaningful contributor to our revenue going forward,” Chief Executive Officer Jeff Miller told analysts and investors during a conference call. “North America production is likely to remain structurally lower in the foreseeable future and has slower growth going forward.”
https://www.worldoil.com//news/2020/7/20/halliburton-looks-beyond-us-shale-charting-a-fundamentally-different-course?id=31307113
