Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

American oil companies are starting to scream "mayday."
CNN ^ | 22 January 2016 | Heather Long

Posted on 01/24/2016 9:05:27 AM PST by Lorianne

Last year, 42 North American drillers filed for bankruptcy, according to law firm Haynes and Boone. It's only likely to get worse this year.

Experts say there are a lot of parallels between today's crisis and the last oil crash in 1986. Back then, 27% of exploration and production companies went bust.

Defaults are skyrocketing again. In December, exploration and production company defaults topped 11%, up from just 0.5% the previous year, according to Fitch Ratings. That's a 2,000%-plus jump.

It's just the beginning, says John La Forge, head of real assets strategy at Wells Fargo. If history repeats, people should prepare for the default rate to double in the next year or so.

No wonder America's biggest banks are setting aside a lot of money in anticipation that more energy companies will go belly up.

(Excerpt) Read more at money.cnn.com ...


TOPICS: Business/Economy; Extended News; US: Iowa; US: Texas
KEYWORDS: 2016election; antifracking; carboncredits; carbondioxide; carbonfootprint; co2; communism; election2016; energy; epa; ethanol; fascism; fracking; globalwarminghoax; iowa; johnlaforge; methane; mtbe; oilindustry; oilprice; opec; petrochemicals; petroleum; popefrancis; rfs; rfsra; romancatholicism; socialism; tedcruz; texas; welfare
Navigation: use the links below to view more comments.
first previous 1-2021-4041-47 next last
To: Lorianne

Go back 12 years.
In the political arena, shale was unviable, and drill baby drill couldn’t solve our energy problems. Or so we were told.

Why? Most metrics showed we needed $60/ barrel oil for the investment costs to be recaptured.

In 2008 when prices were around 90, the claim was that it was unsustainable due to untenable prices at the pump.

Jump forward, and the market has crashed due to a glut, largely from increased US and Russian production, all while OPEC maintained production levels.

The problem remains the cost of production in the U.S. And the international interests (Saudis) are willing to bite a short term bullet to regain their long term dominance over the market place. Why else would OPEC refuse to cut production? They know they win in the long run.

See this story from only 2 days ago, 22 January 2016, OPEC is still not unanimously willing to cut production.

https://www.rt.com/business/329803-opec-oil-saudi-nigeria/

Just my 2c , but this is recent history, in our time. Do your own research.


21 posted on 01/24/2016 9:37:09 AM PST by BlueNgold (May I suggest a very nice 1788 Article V with your supper...)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Lorianne

It’s the oil business.


22 posted on 01/24/2016 9:38:22 AM PST by SeaHawkFan
[ Post Reply | Private Reply | To 1 | View Replies]

To: Lorianne

The wells are drilled it is money in the ground…the stronger will buy out the weaker….The Saudis could go bell up


23 posted on 01/24/2016 9:38:53 AM PST by Hojczyk
[ Post Reply | Private Reply | To 19 | View Replies]

To: RegulatorCountry

Note to self - buy beaten down oil company stocks - price of oil is going back up.


24 posted on 01/24/2016 9:41:25 AM PST by aquila48
[ Post Reply | Private Reply | To 9 | View Replies]

To: TigerClaws

And, since Oboma wants them to die, “Washington” will continue its foreign policies and its overseas work to destroy them as fast as possible.

They are all based in TX, ND, PA, and OK and those eviiiillll “red states” don’t you know.


25 posted on 01/24/2016 9:43:28 AM PST by Robert A Cook PE (I can only donate monthly, but socialists' ABBCNNBCBS continue to lie every day!)
[ Post Reply | Private Reply | To 2 | View Replies]

To: RegulatorCountry

It’s not a ponzi scheme. Never was.


26 posted on 01/24/2016 9:44:09 AM PST by biff
[ Post Reply | Private Reply | To 18 | View Replies]

To: aquila48

I don’t know that it’s bottomed yet, but inevitably the price of oil will go back up. Could be years or even decades, look at the 80’s oil bust.


27 posted on 01/24/2016 9:44:57 AM PST by RegulatorCountry
[ Post Reply | Private Reply | To 24 | View Replies]

To: SeaHawkFan

Good one. The oil business is usually feast/famine.
Back in the mid 80’s the price of oil was $9 per barrel.
Joke going around that time was:
What’s the difference between a Texas oil man and a pigeon?

A pigeon can make a deposit on a Mercedes Benz.


28 posted on 01/24/2016 9:47:27 AM PST by Texas resident (The democrat party will destroy our country and they think it won't affect them.)
[ Post Reply | Private Reply | To 22 | View Replies]

To: SeaHawkFan

Good one. The oil business is usually feast/famine.
Back in the mid 80’s the price of oil was $9 per barrel.
Joke going around that time was:
What’s the difference between a Texas oil man and a pigeon?

A pigeon can make a deposit on a Mercedes Benz.


29 posted on 01/24/2016 9:47:28 AM PST by Texas resident (The democrat party will destroy our country and they think it won't affect them.)
[ Post Reply | Private Reply | To 22 | View Replies]

To: Lorianne

“Iraq sold oil at $22 / barrel on Thursday. Ditto Venezuella.”

Aren’t many refineries that can handle the trash from Venezuela.


30 posted on 01/24/2016 9:51:57 AM PST by PAR35
[ Post Reply | Private Reply | To 12 | View Replies]

To: Lorianne

Shale oil requires a certain price level to warrant drilling. That level is much lower than it was a decade ago, by the way.

But once the well is drilled, its drilled. Drop the price all you want, the well keeps on producing.

New shale oil helped drive down prices, which was a good thing. Decisions by the Saudis also helped, and Iranian oil coming into the market will weaken prices more. So there won’t be many new wells drilled for a while. But as soon as the market tightens up a bit, they’ll be back. They know right where the oil is, they don’t have to go looking for it, which helps to keep the “go” price down.

If they can get a better pipeline network built, the “go” price gets even lower. In the long term, this is very good for us.

By the way, this is normal in the oil business. In the late nineties oil dropped to $8 bucks a barrel. There was blood in the streets in some producing countries. It always comes back up. And it always goes back down again though, thankfully, not back down to $8.


31 posted on 01/24/2016 9:53:19 AM PST by marron
[ Post Reply | Private Reply | To 19 | View Replies]

To: RegulatorCountry

” we’re headed back to square one as far as being independent” - well the oil IS still in the ground for when we pump it.


32 posted on 01/24/2016 9:55:39 AM PST by RKV (He who has the guns makes the rules)
[ Post Reply | Private Reply | To 9 | View Replies]

To: Lorianne

Shale oil is not a Ponzi scheme. Not even close. This is the way commodity prices go. Up and down. Repeat.


33 posted on 01/24/2016 9:57:05 AM PST by RKV (He who has the guns makes the rules)
[ Post Reply | Private Reply | To 16 | View Replies]

To: marron

It’s about the financing.


34 posted on 01/24/2016 10:02:17 AM PST by Lorianne
[ Post Reply | Private Reply | To 31 | View Replies]

To: Lorianne

There were a number of businesses which went bankrupt during the Great Recession. It seemed like the worst hit were those with the greatest amount of debt on their balance sheets. I predict the same thing will happen in this next year for the oil companies. The small companies are the most leveraged and the least likely to survive. Before buying oil stock, I would closely check out their balance sheet.

BTW, we sold the one oil stock we held on 12/31/2013. It has since dropped 96%.


35 posted on 01/24/2016 10:05:30 AM PST by ConstantSkeptic (Be careful about preconceptions)
[ Post Reply | Private Reply | To 1 | View Replies]

To: RegulatorCountry

The House of Saud is in worse shape than the American oil industry. Historically, oil has always been boom or bust. Once a company goes belly up, another takes its place. It’s not rocket science, and it’s not the end of the world or even America. Free markets are messy, and corrupt markets are messier by far.

Toppling the House of Saud would be worth most American oil companies going bankrupt. They will rise again. If Saud falls, Wahabism will die, and that will be worth celebrating. Optimism is a good thing.


36 posted on 01/24/2016 10:13:03 AM PST by antidisestablishment (If Washington was judged with the same standard as Sodom, it would not exist.)
[ Post Reply | Private Reply | To 9 | View Replies]

To: RegulatorCountry

“...we’re headed back to square one as far as being independent.”

You are so right...d@mmit.

These raghead goat humpers have been riding roughshod over us since 1973. Would so love to see Mecca and Riyadh nuked flat.


37 posted on 01/24/2016 10:14:29 AM PST by elcid1970 ("The Second Amendment is more important than Islam.")
[ Post Reply | Private Reply | To 9 | View Replies]

To: Lorianne
and Venz oil is crap oil, like sludge
38 posted on 01/24/2016 10:14:51 AM PST by Chode (Stand UP and Be Counted, or line up and be numbered - *DTOM* -w- NO Pity for the LAZY - Luke, 22:36)
[ Post Reply | Private Reply | To 12 | View Replies]

To: TigerClaws

Obama wants coal and oil to die.

How would he Fly around in Air-force One ,flap his arms


39 posted on 01/24/2016 10:18:08 AM PST by butlerweave
[ Post Reply | Private Reply | To 2 | View Replies]

To: Lorianne
Yes. The word, bailout, brings to mind, communism, fascism, socialism, corporate welfare and other properly descriptive terms.


Remember what the sponsored propaganda has been chanting to you for years now. The low oil price regime will go on for decades. The world will swim in cheap oil forever. Well, see that "bailout" money would be tossed into the black holes of special interests.

Go ahead. Swim. Or stop letting them toss mountains of money into black holes (those more equal animals).


40 posted on 01/24/2016 10:51:38 AM PST by familyop ("Welcome to Costco. I love you." --Costco greeter in "Idiocracy")
[ Post Reply | Private Reply | To 1 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-4041-47 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson