The industry has gone as far as it can go without selling assets. They grabbed as much cash as they could since the crash and now their debt is looming. The companies are selling assets to pay their bills. The age of oil is over. They did it to themselves.
October 14, 2015
By Aaron Clark and Stephen Stapczynski
...There are about 400 buying opportunities as of September, (click here) IHS Chief Upstream Strategist Bob Fryklund said in an interview. Deals will accelerate later this year and into 2016 as companies sell assets to meet debt requirements, he said. West Texas Intermediate crude has averaged about $51 a barrel this year, more than 40 percent below the five-year mean.
Low prices have slashed profits and as of the second quarter about one-sixth of North American major independent crude and gas producers faced debt payments that are more than 20 percent of their revenue. Companies have announced $181.1 billion of oil and gas acquisitions this year, the most in more than a decade, compared with $167.1 billion the same period in 2014, data compiled by Bloomberg show....
The price at $51 per barrel is insufficient to pay the expenses of the USA oil companies. The debts were made when the oil was over $100 per barrel and the banks bought into it. Here is the next bubble to burst when the banks finally realize the industry is bankrupt. The industry in the USA has been bankrupt since peak oil in 2005, but, the cash flow was so tempting no capitalist could resist the dollar signs in front of their eyes.
This is Bloomberg:
The price at $51 per barrel is insufficient to pay the expenses of the USA oil companies. The debts were made when the oil was over $100 per barrel and the banks bought into it. Here is the next bubble to burst when the banks finally realize the industry is bankrupt. The industry in the USA has been bankrupt since peak oil in 2005, but, the cash flow was so tempting no capitalist could resist the dollar signs in front of their eyes.
This is Bloomberg:
October 13, 2015
By Grant Smith
Global oil markets (click here) will remain oversupplied next year as demand growth slows and Iranian exports are poised to recover with the lifting of sanctions, the International Energy Agency said.
While supplies outside OPEC will decline in 2016 in response to lower prices, demand growth will ease from this year’s five-year high amid a weaker outlook for the world economy, allowing the crude surplus to endure, the IEA predicted. Iran could swell the glut if restrictions on its sales are removed with the completion of a nuclear accord, while Iraq has replaced the U.S. as the biggest source of new supplies as its output reaches record levels.
“The market may be off balance for a while longer,” the Paris-based adviser to 29 nations said in its monthly report. “A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels -- should international sanctions be eased -- are likely to keep the market oversupplied through 2016.”
Oil rallied above $50 a barrel in New York last week for the first time since July amid expectations that a slump in U.S. drilling and cutbacks in investment will help whittle away the global supply glut. The advance has stalled as OPEC members boost production, China’s economy shows signs of slowing and U.S. oil output remains elevated....
If anyone says there is still a viable market for oil, they are simply trying to pump up the bubble in order to sell stocks without complete loss. The Bush/Cheney administration was a last "Hail Mary" for petroleum. The industry managed to eek out an existence after peak oil. It was wrong to do, the USA should have started to convert their energies to alternatives in 1995 at the very least.
This is a prime example of CORRUPTION by government. Before Obama there was absolutely no movement into ending the oil dependency. Now, there is nothing but failing businesses. It won't be long that banks will be feeling the pain of bad decisions. NO BAILOUT. The petroleum and banking industries caused this, they can absorb their losses.
LOCAL INDUSTRIES !!!!!! LOCAL ECONOMIES!!!!!!
Gas will remain cheap at the pump for a short while, but, Flex Fuel vehicles are smarter, E85 is better, but, electric vehicles are the future. The Climate Crisis is real and the future is about alternatives and a strong grid. Obama saw this coming and set the course.
The Republicans are still living in the stone age and spending subsidies to petroleum companies that are failing. It is all corruption and when the banks get hit with losses the American people will be expected to BAILOUT the petroleum king pins.
JUST SAY "NO!"
What goes around comes around. This was going to happen and the Republicans financed the corruption that the American taxpayer is going to be expected to bailout the greedy.
