FROM atop Houston’s skyscrapers you can see evidence of the good times just gone. New towers are still being erected all around the city centre, a lagging indicator of the energy boom that ended abruptly in mid-2014 when the price of crude in America dropped from $100 to $43 (today it is around $57). The victims of that crash are harder to spot. “Look! Over there!,” says an oil man, pointing down at the offices of Goodrich Petroleum. A midsized exploration firm specialising in shale oil, its share price has collapsed, its debts are six times as big as the market value of its equity and it does not currently have any rigs in operation. (Goodrich says it has ample liquidity and may sell assets to raise funds.)
At the start of 2015 it seemed that there would be a lot more firms like Goodrich. When OPEC, the oil cartel led by Saudi Arabia, decided to keep pumping oil, it hoped that lower prices would irreparably damage the finances of America’s shale-oil companies. They have revolutionised the energy industry, using junk bonds and a technique known as fracking—that blasts water, sand and chemicals at rock to release oil and gas—to boost America’s share...
from The Economist: Business http://ift.tt/1emndaU
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