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THREAD: We hit a tipping point for oil and gas producers in the West and across the country. Crashing prices and mountains of debt are forcing producers to shut down wells and declare bankruptcy. Just today…
A new survey from the Federal Reserve Bank of Kansas City (which serves Wyoming, New Mexico, and Oklahoma) found nearly 40% of oil companies say they’ll be insolvent within the year if prices remain around $30/barrel. @racheladhe’s story: https://www.bloomberg.com/news/articles/2020-04-07/oil-companies-warn-kansas-city-fed-of-widespread-insolvencies?sref=ukxbWXuf
According to @haynesboone, via @LizHampton1986: Eight oilfield service companies have filed for bankruptcy this year with a total of $10.9 billion in debt. https://www.reuters.com/article/us-global-oil-layoffs/oilfield-companies-cut-jobs-brace-for-bankruptcies-idUSKBN21P2S5
@EIAgov released projections show that the US will become a net importer of oil and gas. https://www.eia.gov/pressroom/releases/press471.php
In New Mexico, production in the Permian Basin, one of the country’s largest oil regions, is coming to a halt. Oil prices need to be more than $50/barrel for Permian producers to turn a profit. Currently, prices are hovering just over $20/barrel. https://www.abqjournal.com/1441247/oil-producers-begin-shutting-down-wells.html
Oil field service company furloughed 3,500 employees, cutting their hours in half. Schlumberger is cutting capital spending by 30%. @cbussewitz’s story: https://apnews.com/eea93a3132cd3a65c10017d1e5122e34
Before the crash, companies began managing their debt by selling off assets, but under the current conditions, $25 billion worth of deals are in jeopardy. Companies are sitting on an additional $27 billion of planned asset disposals. https://finance.yahoo.com/news/historic-oil-slump-puts-multibillion-230100484.html
And it’s not just oil. @taykuy reports that coal production is projected to drop 22% from 2019 levels. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/us-eia-projects-2020-coal-production-to-fall-22-partly-due-to-covid-19-57948549
