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Wednesday, January 20, 2016

North American Oil Drillers Looking at $102 Billion Cash Shortfall in 2016

From Fuel Fix:
North America oil drillers will likely come up $102 billion short on the cash they need to operate this year as crude prices fall to $30 a barrel, according to a study by the consultancy AlixPartners. 
The $102-billion cash shortfall could force more domestic crude producers to take more drastic measures in 2016, including widespread pay cuts or wage freezes, cutting employees’ hours and pressuring suppliers for another 15 to 20 percent reduction in service and equipment prices. 
Many drillers will have to shed the traditional model of cutting items from an existing budget and adopt a so-called “lights on” approach: starting with a budget of $0 and spending only on essentials. 
“They’re quickly beginning to exhaust their options, and that’s why you’re seeing more bankruptcies,” said Dennis Cassidy, managing director at AlixPartners, which specializes in restructuring. “There isn’t an easy solution.”
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