Chesapeake bankruptcy shows US shale growth model has come under siege

摘要

CHESAPEAKE Energy may be one of the biggest shale players yet to seek bankruptcy protection, but the independent's recent Chapter 11 filing is unlikely to be the last in the US shale patch. The brief Opec+ price war between Saudi Arabia and Russia combined with the coronavirus lockdowns to drive down oil prices earlier this year. The price collapse served as the wake-up call that the US shale industry needed to finally realise its strategy of aiming for massive production growth every year was on shaky ground. Shareholders in shale players wanted returns, but have instead witnessed bloated capital spending budgets to fund a drilling drive that transformed the Permian into the world's top shale basin. Investors are now set for pain as operators ready significant asset write-downs in the second quarter. Shale companies tried to rein in spending once they realised investor enthusiasm had vanished a couple of years ago. Credit and equity markets dried up and energy stocks were performing poorly.