The Robin Hooders and robo-traders do not have enough common sense, apparently, even to lay off the “buy” key for a single day in honor of last night’s political shit-show. And the explanation is not hard to find. The financial markets are so utterly corrupted and broken by the Fed’s own monetary shit-show that all […]
“With such a rapid decline in fracking already visible, very little activity will be happening in the oil basins during the remainder of the second quarter of 2020. The natural base production decline, which we have seen as an absolute floor for production, therefore becomes an increasingly relevant production scenario,“ says Rystad Energy Head of Shale Research Artem Abramov.
https://wolfstreet.com/2020/04/22/u-s-shale-faces-largest-ever-drop-in-fracking-activity/
Slowing shale-drilling activity is the latest damper on U.S. manufacturers that had come to rely on a booming domestic energy market. Advances in fracking and drilling transformed global energy markets over the past decade, raising U.S. oil-and-gas production to record levels. That has created big business for American factories supplying drillers with cranes, engines and pipes. The oil-and-gas industry bought $48 billion worth of manufactured products in 2018, the U.S. Bureau of Economic Analysis said, four times as much as was purchased in 2009.
The once-powerful partnership between fracking companies and Wall Street is fraying as the industry struggles to attract investors after nearly a decade of losing money.
Frequent infusions of Wall Street capital have sustained the U.S. shale boom. But that largess is running out. New bond and equity deals have dwindled to the lowest level since 2007. Companies raised about $22 billion from equity and debt financing in 2018, less than half the total in 2016 and almost one-third of what they raised in 2012, according to Dealogic.
Some of fracking’s biggest skeptics are on Wall Street. They argue that the industry’s financial foundation is unstable: Frackers haven’t proven that they can make money. “The industry has a very bad history of money going into it and never coming out,” says the hedge fund manager Jim Chanos, who founded one of the world’s largest short-selling hedge funds. The 60 biggest exploration and production firms are not generating enough cash from their operations to cover their operating and capital expenses. In aggregate, from mid-2012 to mid-2017, they had negative free cash flow of $9 billion per quarter.
https://www.nytimes.com/2018/09/01/opinion/the-next-financial-crisis-lurks-underground.html
