{"id":15675,"date":"2015-12-25T12:35:28","date_gmt":"2015-12-25T17:35:28","guid":{"rendered":"http:\/\/olduvai.ca\/?p=15675"},"modified":"2015-12-25T14:13:06","modified_gmt":"2015-12-25T19:13:06","slug":"oil-bankruptcies-hit-highest-level-since-crisis-and-theres-more-to-come-fed-warns","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=15675","title":{"rendered":"Oil Bankruptcies Hit Highest Level Since Crisis And There’s “More To Come”, Fed Warns"},"content":{"rendered":"

Oil Bankruptcies Hit Highest Level Since Crisis And There’s “More To Come”, Fed Warns<\/a><\/h3>\n
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\u201cTwo things become clear in an analysis of the financial health of US hydrocarbon production: 1) the sector is not at all homogenous, exhibiting a range of financial health; 2) some of the sector indeed looks exposed to distress [and] lifelines for distressed producers could include public equity markets, asset sales, private equity, or consolidation. If all else fails, Chapter 11 may be necessary.\u201d That\u2019s\u00a0Citi\u2019s assessment<\/a>\u00a0of America\u2019s \u201cshale revolution\u201d, which the Saudis have been desperately trying to crush for more than a year now.<\/p>\n

As Citi and others have noted – a year or so after we discussed the issue at length – uneconomic producers in the US are almost entirely dependent on capital markets for their continued survival. \u201cThe shale sector is now being financially stress-tested, exposing shale\u2019s dirty secret:\u00a0many shale producers depend on capital market injections to fund ongoing activity because they have thus far greatly outspent cash flow,<\/strong>\u201d Citi wrote in September. Here\u2019s a look at what the bank means:<\/p>\n

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Of course this all worked out fine in an environment characterized by relatively high crude prices and ultra accommodative monetary policy. The cost of capital was low and yield-starved investors were forgiving, allowing the US oil patch to keeping drilling and pumping long after it should have been bankrupt. Now, the proverbial chickens have come home to roost. In the wake of the Fed hike, HY is rolling over and as UBS\u00a0noted over the summer<\/a>,\u00a0\u201cthe commodity related industries total 22.8% of the overall HY market index on a par-weighted basis;<\/strong>\u00a0sectors most at-risk for defaults (defined as failure to pay, bankruptcy and distressed restructurings) total 18.2% of the index and include the oil\/gas producer (10.6%), metals\/mining (4.7%), and oil service\/equipment (2.9%) industries.\u201d<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Oil Bankruptcies Hit Highest Level Since Crisis And There’s “More To Come”, Fed Warns \u201cTwo things become clear in an analysis of the financial health of US hydrocarbon production: 1) the sector is not at all homogenous, exhibiting a range of financial health; 2) some of the sector indeed looks exposed to distress [and] lifelines […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[3903,1996,7418,4333,184,3730,195,200,1450,303,305,9932,441,442,505,522,534,1729,592,600,6041,1264,701,4318],"class_list":["post-15675","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-bankruptcies","tag-capital-expenditures","tag-capital-markets","tag-crude","tag-crude-oil","tag-dallas-fed","tag-debt","tag-default","tag-equity-markets","tag-fed","tag-federal-reserve","tag-high-yield","tag-iran","tag-iraq","tag-market-share","tag-middle-east","tag-monetary-policy","tag-oil-and-gas-industry","tag-oil-price","tag-opec","tag-private-equity","tag-recession","tag-saudi-arabia","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15675","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15675"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15675\/revisions"}],"predecessor-version":[{"id":15676,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15675\/revisions\/15676"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15675"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15675"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15675"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}