Zombies Appear In U.S. Oilfields As Crude Plumbs New Lows
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., Comstock Resources, and Goodrich Petroleum Co 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."
Read more at Reutershttp://www.reuters.com/article/us-oil-usa-zombies-insight-idUSKBN0TT0FA20151210#LGyyIbjyLBuurDDu.99
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Oil Dips Below $37 As OPEC Pumps Most In Three Years
Oil fell below $37 a barrel on Thursday, after new data showed OPEC is still pumping like there is no tomorrow.
The mighty oil cartel produced 31.7 million barrels a day in November, its latest monthly report shows. That is the highest output in over three years and 1.7 million barrels a day over its former production ceiling.
OPEC production rose by 230,000 barrels a day last month, according to secondary sources that track OPEC's production levels.
The news pushed oil prices back below $37 a barrel for the second time this week. Last time oil was cheaper than that was in the depths of the Great Recession in February 2009. It reached a peak of nearly $108 per barrel in June 2014.
MORE...
http://money.cnn.com/2015/12/10/investing/oil-prices-opec-record/
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Buzz Clik
(38,437 posts)It's the cycle of economic life.
msongs
(67,421 posts)Buzz Clik
(38,437 posts)Once the Saudis figure they have damaged the fracking industry, they will back off production and prices will spike.
Volaris
(10,273 posts)is an indication of how politically and scientifically illiterate we have become.
fasttense
(17,301 posts)On solar or wind power.
packman
(16,296 posts)but to keep pumping oil out. I am sure they have debt (though it is hard to imagine) for their lifestyle and largesse and buying all that military crap from us and now are in the strange position of having to pay that debt with oil, oil and more oil. Of course a side benefit is destroying the shale industry. Remember, the shale oil boom started that lowering of prices, the OPEC group suddenly found their stuff was in a competitive market and with all those bills to be paid and palms to be greased, did they really have any choice BUT lower their prices to keep their oil salable?
