The shale industry is full of zombies. Lots of companies that will never get out of debt or never cut it into profitability for a whole host of reasons. It is also peppered with some really competitive, slim and mean outfits that are able to withstand most beatings. If low prices remain for a little while all this does is to cull the zombies and liberate capital and market for the healthy ones to give them a further boost. Russia wants to kill shale – they just breed an even bigger, meaner monster. Sometimes it’s better not to wake the dogs.
The latest crash in oil prices is threatening to push $140 billion of investment-grade energy debt over the edge into junk.