Environment & Energy
Related: About this forumZombies appear in U.S. oilfields as crude plumbs new lows
Source: Reuters
Top News | Thu Dec 10, 2015 7:35am EST
Zombies appear in U.S. oilfields as crude plumbs new lows
HOUSTON/CHICAGO | BY ANNA DRIVER AND TRACY RUCINSKI
Drained by a 17-month crude rout, some U.S. shale oil companies are merely hanging on for life as oil prices lurch further away from levels that allow them to profitably drill new wells and bring in enough cash to keep them in business.
The slump has created dozens of oil and gas "zombies," a term lawyers and restructuring advisers use to describe companies that have just enough money to pay interest on mountains of debt, but not enough to drill enough new wells to replace older ones that are drying out.
Though there is no single definition of a zombie, most investors and analysts consulted by Reuters say they tend to have exceptionally high debt loads and face the prospect of shrinking oil reserves.
About two dozen oil and gas companies whose debt Moody's rates toward the bottom of its junk bond scale broadly fit that description. Investors and analysts mentioned SandRidge Energy Inc. (SD.N), Comstock Resources (CRK.N), and Goodrich Petroleum Co (GDP.N) as some of that group's more prominent members.
To stay alive, zombie companies have curbed costly drilling and are using revenue from existing production to pay interest and other expenses in a process some describe as "slow-motion liquidation."
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Read more: http://www.reuters.com/article/us-oil-usa-zombies-insight-idUSKBN0TT0FA20151210
saturnsring
(1,832 posts)hunter
(38,321 posts)... to deprive nations and groups unfriendly to U.S.A. empire and our allies oil revenues.
If smaller U.S.A. oil producers are hurt, well, tough shit.
2naSalit
(86,673 posts)I see the same happening up in the Bakken and seeing out-migration of tar sands workers heading south for who-knows-what/where. The man camps in SD and MT are shutting down and things are real tough for the newly unemployed as the communities give them incentive to move on, slowing down and possibly shutting down. Since foreign crude is looking to be cheap for some time, the latest forms of extraction have become too costly to bother.
I consider this a plus and could also help facilitate the much needed transition to non-carbon fuel generation.