Finances of Fracking: Shale Industry Drills More Debt Than Profit

About the Finances of Fracking: Shale Industry Drills More Debt Than Profit Series

Since 2007, the oil and gas industry has lost $280 billion betting on the shale boom, which has been made possible by hydraulic fracturing (fracking) and Wall Street financing, and these companies are still borrowing heavily. But even as the industry struggles to recoup costs — much less profits — by continuing to borrow and drill, the great promise of the shale revolution is also threatened by another specter: declining production at each well.

In this series, DeSmog’s Justin Mikulka and Sharon Kelly investigate the finances of the fracking industry and how falling fossil fuel output and questionable lending practices reminiscent of the mid-2000s housing bubble may be setting up another bubble, one with a bill that may ultimately be paid by American taxpayers and the planet.

Image: Wyoming’s Jonah gas field is marked by a network of well pads, roads, and pipelines. Credit: Bruce Gordon, EcoFlight, CC BY 2.0

In This Series

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The oil and gas industry is looking to capitalize off an increasingly-popular socially responsible investing wave that emphasizes the environment.

The oil and gas industry is looking to capitalize off an increasingly-popular socially responsible investing wave that emphasizes the environment.
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Energy companies are increasingly having to face the unprofitable reality of fracking, and some executives are now starting to admit that publicly. But the question is whether the industry will lis...
Analysis
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Last August, ExxonMobil warned that it may need to remove 20 percent of its oil and gas proved reserves from its books. While that was a shocking number from the oil major, reality proved to be eve...
Analysis
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After over a decade of the much-hyped U.S. fracking miracle, the U.S. oil and gas industry is having to deal with years of losses and falling asset values which has dealt the industry a serious fin...
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Amid a record wave of bankruptcies, the U.S. oil and gas industry is on the verge of defaulting on billions of dollars in environmental cleanup obligations. Even the largest companies in the indus...
Analysis
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In mid-July, Secretary of Energy Dan Brouillette signed an order authorizing the export of liquefied natural gas, or LNG, from a proposed $10 billion terminal and gas pipeline project in Oregon. Th...
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More than a decade ago, fracking took off in the Bakken shale of North Dakota and Montana, but the oil rush that followed has resulted in major environmental damage, risky oil transportation withou...
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Warren Buffet has a famous quote about investing: “Only when the tide goes out do you discover who's been swimming naked.” When it comes to his $10 billion investment in Occidental Petroleum, Buff...
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The oil, gas, and petrochemical industries have taken a massive financial blow from the COVID-19 pandemic, a new report from the Center for International Environmental Law (CIEL) concludes, but its...
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The finances of the oil and gas industry are so dismal that the major banks that have funded the money-losing fracking boom are now exploring taking the unusual step of taking over the oil companie...
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The Washington Post reported March 10 that the Trump administration was considering some type of financial help for the failing U.S. shale oil and gas industry, “as industry officials close to the ...
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Last year, the financial prospects for the North American natural gas market were looking grim, as nervous investors started pulling back and producers announced big spending cuts and layoffs. Tod...
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Oil prices collapsed today amid falling energy demand and the global response to the novel coronavirus outbreak, as the number of confirmed COVID-19 cases worldwide reached over 113,000. On Friday,...
Analysis
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In a 2016 interview with Fraud Magazine, former Enron CFO Andrew Fastow explained what he thought made him so successful while at the former energy corporation that's now infamous for financial sca...
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On February 15, 2018, a fracked natural gas well owned by ExxonMobil's XTO Energy and located in southeast Ohio experienced a well blowout, causing it to gush the potent greenhouse gas methane for ...
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In over their heads with debt, U.S. shale oil and gas firms are now moving from a boom in fracking to a boom in bankruptcies. This trend of failing finances has the potential for the U.S. public, b...
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This month, the energy consulting firm Wood MacKenzie gave an online presentation that basically debunked the whole business model of the shale industry. In this webinar, which explored the declin...
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The company that for the past decade has been emblematic of the rise and pitfalls of shale drilling and fracking, Chesapeake Energy, saw its stock price collapse today, plunging by 29.15 percent in...
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California and Colorado’s public pension funds together lost out on over $19 billion over the past decade by investing in fossil fuel stocks, according to a report released on Tuesday. The three p...
Analysis
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This week, the Wall Street Journal highlighted that the U.S. oil and gas shale industry, already struggling financially, is now facing “core operational issues.” That should be a truly frightening ...
Analysis
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At a recent natural gas industry conference in Houston, Woodside Petroleum CEO Peter Coleman warned his colleagues to avoid the fate of another fossil fuel, according to trade publication Natural G...
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In early 2018 when major financial publications like the Wall Street Journal were predicting a bright and profitable future for the fracking industry, DeSmog began a series detailing the failing bu...
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A year ago, Chesapeake Energy, at one time the nation’s largest natural gas producer, announced it was selling off its Ohio Utica shale drilling rights in a $2 billion deal with a little-known priv...
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Warren Buffett, CEO of investment holding company Berkshire Hathaway, is considered one of the top investors in history and can back up that track record with a personal wealth of around $90 billio...
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After a decade of the American fracking industry burning through hundreds of billions of dollars more than it earned, this industry previously dominated by shale drilling specialists is entering a ...
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Two years ago, the U.S. fracking industry was trying to recover from the crash in the price of oil. Shale companies were promoting the idea that fracking was viable even at low oil prices (despite ...
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Los Angeles Mayor Eric Garcetti recently announced the city is scrapping plans for a multi-billion-dollar update to three natural gas power plants, instead choosing to invest in renewable energy an...
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The fracked gas industry's long borrowing binge may finally be hitting a hard reality: paying back investors. Enabled by rising debt, shale companies have been achieving record fracked oil and gas...
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In 2015, Pioneer Natural Resources filed a report with the federal Securities and Exchange Commission, in which the shale drilling and fracking company said that it was “drilling the most productiv...
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2018 was the year the oil and gas industry promised that its darling, the shale fracking revolution, would stop focusing on endless production and instead turn a profit for its investors. But as th...
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In 2016, lower oil prices led to an overall drop in production for shale companies, which use horizontal drilling and fracking to extract oil and gas from shale formations such as the Marcellus and...
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The U.S. Environmental Protection Agency (EPA) has clearly documented the multiple risks — despite repeated dismissals from the oil and gas industry — that hydraulic fracturing (fracking) poses to ...
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In the climactic final scene in There Will Be Blood — arguably the greatest movie about the oil industry — the main character played by Daniel Day Lewis explains how he sucked the oil from a neighb...
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The oil and gas industry is finally acknowledging how dangerous employment can be for its workers after years of touting the sector as a beacon of worker safety. This sudden honesty about the dange...
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At a recent industry conference, Terry Spencer, head of natural gas infrastructure company ONEOK, made clear the direction the fracking industry was headed: “One of these days one of these big ol’ ...
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Back in 2011, The New York Times first raised concerns about the reliability of America's proved shale gas reserves. Proved reserves are the estimates of supplies of oil and gas that drillers tell ...
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Last year the fracking company Halcón Resources announced a new strategy that was sold as the path to profits for the previously troubled shale oil and gas firm. The company had sold its stake in t...
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Most people probably aren’t familiar with the acronym ZIRP. It stands for zero interest rate policy and is the policy that unintentionally created the American fracking bubble — just one of its man...
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About a half decade ago, as the shale drilling rush was sweeping across the U.S., drillers needed upfront cash — and quick — to let them snap up acreage, drill and frack exploratory wells, and hone...
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The U.S. shale oil industry hailed as a “revolution” has burned through a quarter trillion dollars more than it has brought in over the last decade. It has been a money-losing endeavor of epic prop...
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EOG Resources is one of the top companies in the fracking industry, and thanks to the new tax bill passed by Republicans and President Donald Trump at the end of last year, EOG had an exceptionally...
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Shale oil, which the Energy Information Administration projects will represent a rising proportion of American oil supplies in the coming decades, has a surprising Achilles heel: its low octane lev...
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In 2008, Aubrey McClendon was the highest paid Fortune 500 CEO in America, a title he earned taking home $112 million for running Chesapeake Energy. Later dubbed “The Shale King,” he was at the for...