The new coronary pneumonia epidemic has already caused a major impact on the global economy, and it is difficult for any economy to be alone. The sharp drop in oil prices has caused a sharp increase in losses for US shale gas producers.
According to Reuters, Chesapeake Energy, the pioneer of the American shale oil and gas revolution, is preparing to apply for bankruptcy protection and has discussed with its creditors a potential $ 1 billion financing plan to deal with the collapse of crude oil prices Unprecedented situation.
Shell sells Appalachian shale gas assets for US $ 541 million. World Petroleum The Hague reported on May 4, 2020 that Royal Dutch Shell, through its subsidiary SWEPI LP ("Shell"), and US-listed energy company National Fuel Gas Company (NFG) and its subsidiaries Senegal Resources, National Fuel Gas Midstream Company and NFG Midstream Covington Corporation reached an agreement to sell their Appalachian company to the US company for $ 541 million Regional shale gas assets. The effective date of this transaction is January 1, 2020. The consideration will be paid in cash, but NFG has the right to choose to provide up to US $ 150 million of NFG common stock as consideration. The deal is part of Shell ’s plan to divest non-core assets and is in line with Shell ’s shale strategy, which focuses on developing lighter, tighter oil assets with higher profit margins. The transaction, which is expected to be completed by the end of July this year, is subject to regulatory approval.
US shale industry enters "dark moment"
The data shows that the average cost price of the six largest shale oil producing regions in the United States is US $ 46.6 per barrel, and the lowest cost region is US $ 32.4 per barrel.
Based on the current WTI crude oil price of around US $ 24 per barrel, the vast majority of shale oil producers are in an unprofitable situation, let alone creating a positive cash flow to repay debts that are about to expire.
When the price of crude oil is lower than $ 40, it will be difficult for shale manufacturers to obtain financing from the capital market. The previous model of "dismantling the east wall to make up the west wall" obviously does not work.
As such, the wave of debt defaults by US shale oil manufacturers may have concentrated during the period of low oil prices.
The industry estimates that the US shale oil industry will have $ 40 billion in loans to repay in 2020, and the total outstanding loans in the next four years will exceed $ 200 billion. Shale oil producers are ushering in the harshest winter.
Reuters news on May 8, due to the epidemic caused a sharp decline in oil demand, this week, the number of oil and gas rigs still in operation in the United States will be further reduced to a new low in 80 years.
What is even more frustrating in the industry is that the US government does not seem to have much means to solve the problem of corporate liquidity. Back in mid-April, U.S. Treasury Secretary Mnuchin stated that he was considering creating a government loan program for US oil companies to deal with the plunge in oil prices. But as of now, there has been no substantial progress in financial assistance, and corporate bankruptcy incidents have been staged one after another.
