U.S. shale companies facing a money-losing reality after oil price collapse

first_img FacebookTwitterLinkedInEmailPrint分享Bloomberg:America’s shale producers already had a profitability problem. It just got a lot worse.At a stroke, Saudi Arabia and Russia and their battle for market share have made almost all U.S. shale drilling unprofitable. Only five companies in two areas of the country have breakeven costs lower than the current oil price, according to data compiled by Rystad Energy, an Oslo-based consultancy.Wells drilled by Exxon Mobil Corp., Occidental Petroleum Corp. Chevron Corp. and Crownquest Operating LLC in the Permian Basin, which stretches across West Texas and southeastern New Mexico, can turn profits at $31 a barrel, Rystad’s data show. Occidental’s wells in the DJ Basin of Colorado are also in the money at that price, which is where oil settled Monday.But that’s not the case for the rest of the shale industry — more than 100 operators in a dozen fields. For them, drilling new wells will almost certainly mean going into the red.Shale projects are heralded for their ability to be quickly ramped up and down. But because output from these wells declines much faster than from their old-school, conventional cousins, companies have to drill more of them just to keep output flat. That has meant sluggish investor returns, one of the main reasons oil and gas represents less than 4% of the S&P 500 Index.At this point, “companies should not be burning capital to be keeping the production base at an unsustainable level,” said Tom Loughrey, a former hedge fund manager who started his own shale-data firm, Friezo Loughrey Oil Well Partners LLC. “This is swing production — and that means you’re going to have to swing down.”“Even the best operators will have to reduce activity,” said Artem Abramov, head of shale research at Rystad. “It’s not only about commerciality of the wells. It’s a lot about corporate cash flow balances. It’s almost impossible to be fully cash flow neutral this year with this price decline.”[Rachel Adams-Heard and Kevin Crowley]More: Shale’s new reality: Almost all wells drilled now lose money U.S. shale companies facing a money-losing reality after oil price collapselast_img read more

Villa or Fulham to claim £160m-£280m by winning Wembley showdown

first_img1 Could Wembley Stadium – the home of English football – soon by owned by an American? The winners of this weekend’s Sky Bet Championship play-off final between Aston Villa and Fulham will land a jackpot of at least £160million.Promotion to the Premier League is the biggest prize in world football and the winners could rake in more than £280million if they survive their first season in the top flight.Villa and Fulham hope to join Wolves and Cardiff in the Premier League next season with victory in Saturday’s annual winner-takes-all clash at Wembley.The winners will benefit from future additional revenue of at least £160m across the next three seasons, which could rise to in excess of £280m if they retain their Premier League status.The figures, released by Deloitte, are the same as last season with this year’s showdown falling in the second year of the latest, record-breaking three-year television rights deal.“All eyes will be on Wembley on Saturday afternoon for this winner-takes-all clash,” said Deloitte’s head of the sports business group Dan Jones.“It will be, as ever, a fantastic advert for the competitive intensity of the Championship and the financial attraction of the Premier League.”Jones said the financial rewards for the winners of the Champions League final between Liverpool and Real Madrid in Kiev later on Saturday pale in comparison.“Whilst in football terms the UEFA Champions League final is the bigger game, the financial rewards on offer in Kiev are dwarfed by those at stake in north London,” Jones added.“The difference between winning and losing for Liverpool this weekend, is a mere £4m in distributions from UEFA and they are already assured of appearing in next year’s competition.”last_img read more