“The likelihood of them being able to meet financial targets after this is quite small,” says one financial analyst.
The process of extracting oil and natural gas from the Earth by drilling deep wells and injecting liquid at high pressure is expensive; many fracking companies go into a tremendous amount of debt. Due to oversupply and consistently low prices for natural gas over the last 10 years, many have yet to pay those debts back and become profitable.
“The industry had already been seeing negative cash flows and a huge debt overhang for quite a while, and we certainly don’t see that changing after this current downturn in the market,” Tom Sanzillo, director of finance for the Institute of Energy Economics and Financial Analysis (IEEFA) told EHN.
Read the full story here: https://www.ehn.org/coronavirus-oil-and-gas-2645520057.html