Shale’s Bust Shows Basis of Boom: Debt, Debt and Debt: QuickTake - Bloomberg

Shale’s Bust Shows Basis of Boom: Debt, Debt and Debt: QuickTake - Bloomberg:

America’s shale boom once looked like one of the century’s great business success stories. Now some of its most iconic names are in bankruptcy court and we’re not done yet. But while Covid-19 and the biggest-ever crude crunch it brought may have been the last straw, the sector’s weaknesses extend back many years, as U.S. oil and gas companies ran up over $300 billion in losses since 2010. Here’s a look at what went wrong and what the fallout might be.

1. How bad is it? 

More than 230 North American oil and gas producers, owing at least $152 billion in debt, have filed for bankruptcy since the beginning of 2015, according to the latest report from law firm Haynes & Boone. In the second quarter alone, companies that went bankrupt had total debts of $29 billion. The restructurings are showing no signs of letting up, as June tied for the busiest month on record with seven oil and gas bankruptcies, according to data compiled by Bloomberg. That month, the shale bust marked a grim milestone by claiming the pioneer of America’s drilling renaissance, Chesapeake Energy Corp. For other parts of the shale supply chain, 2020 is also on pace to be the biggest year of bankruptcies in terms of debt owed.