As Crude Prices Drop Lower, Drillers Searching for Relief

From Reuters:
Pain is quickly growing more acute in the new year at beleaguered U.S. shale companies as a global supply glut sinks crude further to 11-year lows, putting added financial stress on the most heavily indebted. 
Debt and equity investors have all but given up on the exploration and production sector as oil prices tumble lower. In the last year, the SIG index of oil companies fell 42 percent, compared with a 0.6 percent decline in the Standard & Poor's 500 index. 
SandRidge Energy Inc, a once high-flying Oklahoma-based shale company backed by billionaire investors Leon Cooperman and Canada's Prem Watsa, was delisted by the New York Stock Exchange on Wednesday. The stock last traded on the NYSE for less than 20 cents a share. 
Though companies ended 2015 with enough cash on hand to cover interest payments for well into next year, they cannot afford to drill new wells. The gloomier outlook is expected to prod more of them to restructure and give up on trying to ride out a downdraft showing no signs of abating soon.
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The executive vice president of the Ohio Oil and Gas Association, Shawn Bennett, didn't mince words when speaking about the current state of affairs at the Guernsey Energy Coalition:
"Some analysts say it should improve by the second half of 2016, some say it will last much longer than first anticipated. 
"There is no way to sugar coat this and I am not going to try," Bennett emphatically stated. "There has been a 57 percent drop in oil prices, which as of Jan. 7 is at $33.97 a barrel, and a 67 percent drop in natural gas prices to about $1.50 per million British Thermal Units (how natural gas is priced). 
"But people [in the industry] are adjusting. It is not the first time this has happened, and it won't be the last. Gas and oil companies are re-evaluating where and when to drill, and the expected outcome. Production will continue to drop off. It is difficult for them to make ends meet with those prices."
Click here to read the rest of that article from The Daily Jeffersonian.

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