Second U.S. shale boom's legacy: Overpriced deals, unwanted assets
Source: Reuters
BUSINESS NEWS AUGUST 31, 2020 / 7:12 AM / UPDATED 42 MINUTES AGO
Second U.S. shale boom's legacy: Overpriced deals, unwanted assets
Jessica Resnick-Ault, Dmitry Zhdannikov, David Gaffen
NEW YORK (Reuters) - Oil and gas companies plunged over $156 billion into corporate takeovers and land deals during the second U.S. shale boom, in a massive bet that good times would continue and crude prices would rise. Many of those deals have become financial albatrosses.
The prospect for relief is limited: the industry is still working through the shock of a historic collapse in fuel demand in such a short period of time, prompted by the sudden impact of the coronavirus on global mobility. Oil companies are cutting their budgets to preserve cash and survive - not to spend it on buying more companies.
That leaves few companies with the money or the appetite to buy distressed assets. Another 150 North American oil and gas producers could face bankruptcy by the end of 2022, according to Rystad Energy, if crude prices remain near current levels.
The shale revolution turned the United States into the world’s largest crude producer, pumping out more than 12 million barrels per day (bpd) at its peak. The industry beat forecasts again and again for production growth, but rarely for financial returns.
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Read more: https://www.reuters.com/article/us-global-oil-shale-investments/second-u-s-shale-booms-legacy-overpriced-deals-unwanted-assets-idUSKBN25R1GG