• 4 minutes Ten Years of Plunging Solar Prices
  • 7 minutes Hydrogen Capable Natural Gas Turbines
  • 10 minutes World looks on in horror as Trump flails over pandemic despite claims US leads way
  • 13 minutes Large gas belt discovered in China
  • 41 mins COVID 19 May Be Less Deadly Than Flu Study Finds
  • 3 hours 60 mph electric mopeds
  • 3 mins Would bashing China solve all the problems of the United States
  • 3 hours China to Impose Dictatorship on Hong Kong
  • 9 hours Pompeo's Hong Kong
  • 55 mins Chicago Threatens To Condemn - Possibly Demolish - Churches Defying Lockdown
  • 15 mins Let’s Try This....
  • 3 hours Nothing can shake AMLO’s fossil-fuel fixation
  • 15 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 11 mins Oil and Gas After COVID-19
  • 4 hours Iran's first oil tanker has arrived near Venezuela
  • 4 hours Natural gas is crushing wind and solar power
  • 5 hours New Aussie "big batteries"
  • 10 hours Monetary and Fiscal Policies in Times of Large Debt:
Oil Slides As Russia Plans To Raise Production

Oil Slides As Russia Plans To Raise Production

Reports that Russia plans to…

IEA: Peak Oil Demand Is Still Years Away

IEA: Peak Oil Demand Is Still Years Away

The world hasn’t seen peak…

China Scoops Up Cheap Nigerian Oil

China Scoops Up Cheap Nigerian Oil

Nigeria can finally let off…

Haley Zaremba

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

More Info

Premium Content

Permian Bankruptcies Could Fuel A Buying Spree For Big Oil

The United States shale revolution is over. Production in the Permian Basin, which spreads across West Texas and Southeast New Mexico, has been slowing for months, but the novel coronavirus took things from bad to much, much worse for U.S. shale. The oil price shock that followed the spread of the COVID-19 pandemic, combined with a massive global oil glut spurred by a spat between with learning OPEC+ member countries of Russia and Saudi Arabia, drove West Texas Intermediate oil prices down to a previously unthinkable -$37.63 a barrel earlier this month.  While shale prices have since moderately rebounded, the Permian Basin is still in bad shape. The oil fields that made the United States the biggest crude oil producer in the world is now seeing tens of thousands of fired and furloughed employees as the region is rocked by a sweep of bankruptcies across the shale sector. Last week CNBC reported that “the oil industry shakeout is just beginning with more production cuts and bankruptcies ahead,” detailing that “U.S. oil companies are already paring back spending and closing wells, but wild trading in the futures market was a warning to curb production now because the world at some point will not be able to store any more supply.”

Just because the U.S. oil industry has hit a rough patch, however, doesn’t necessarily mean that the West Texas shale play is all played out. In fact, it stands to reason that, as competition dries up and blows away like so many tumbleweeds, Big Oil may step in and buy up faltering shale independents. 

Related: How COVID-19 Will Change Oil Markets Forever

Not all industry experts agree on this outlook, however. “It may be tempting to think oil giants like Exxon Mobil Corp. will swoop in and pick up smaller crude producers at bargains, given the debt on a wide swath of weaker energy companies now trades at fire-sale prices, reported MarketWatch earlier this week. “But a takeover spree won’t be so easy to pull off, as depressed crude prices leave even the sector’s energy stalwarts without a clear picture of their own product’s worth. There’s also unease about when, and how much, crude will be needed once the coronavirus threat subsides.” 

According to Bryant Dieffenbacher, an analyst for Franklin Templeton, “there are a lot of uncertainties, but perhaps the biggest of those is the price of oil.” He told MarketWatch that any potential candidates for mergers and acquisitions in the shale game to be “one-off, and driven by unique circumstances, rather than a widespread industry trend.”

In fact, the extreme volatility of the oil markets has led many industry experts to question whether investors should continue to put their money in oil at all. It was already common sentiment that the oil industry has kissed its glory days goodbye as the world edges further into a global energy transition in the face of catastrophic climate change. Even Saudi Aramco, in the biggest initial public offering in history, acknowledged that they expect to see peak oil by mid-century. 

As the pandemic turns the entire global energy sector on its head, the World Economic Forum has suggested that if there were ever a time for an energy revolution, that time is now. The international economics organization posited the question, “as coronavirus shocks the energy sector and economy, is now the time for a new energy order?” in an article earlier this week. The answer, according to their writers, seems to be yes. 

By Haley Zaremba for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Zipper on April 30 2020 said:
    Complete contempt for this article after this comment:

    It was already common sentiment that the oil industry has kissed its glory days goodbye as the world edges further into a global energy transition in the face of catastrophic climate change.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News