If the carnage that took place in the U.S. shale oil patch during the first quarter of 2020 is any indication of the financial health of the industry, just wait until the second-quarter results are released. Yes, there’s going to be serious BLOODSHED in the shale industry come early August.
While I knew several shale companies posted significant impairment write-offs last quarter, I had no idea of the extent of the damage. Just about every shale oil company posted an impairment write-off in their Q1 2020 results. And, when we add up the total for the leading twelve shale companies, it was a stunning $40 billion:
Marathon came in first place by writing off $7,822 million or $7.8 billion of asset impairments. Concho wasn’t too far behind in second place with $7.7 billion, but it also took a $1.9 billion impairment write-off of “Goodwill.” Thus, Concho wrote down a total of $9.7 billion impairments; however, I only included the “asset” impairments in the chart above.
These impairments destroyed the “ASSET VALUE” of many of the shale companies. For example, Concho Resources posted the company’s assets were worth $24.7 billion Q1 2019 versus $13.6 billion after the impairment write-off.
Interestingly, the major oil companies such as ExxonMobil and Chevron did not post any impairments last quarter. However, I believe they will be doing so in the next few quarters.
Regardless… with many shale oil companies cutting production and receiving a much lower oil price during Q2 2020, it’s going not going to be pretty when their financial results are released.
THANK YOU ALL FOR THE SUPPORT: I just wanted to thank all the individuals who continue to support the SRSrocco Report website and youtube channel. I know some of you have canceled memberships as times are tough. I totally understand. If you are new to the site and find the information valuable, please consider supporting the website, if you have the means to do so, at Paypal or Patreon below.
If you are new to the SRSrocco Report, please consider subscribing to my: SRSrocco Report Youtube Channel.
I would also like to thank those foundation supporters, who have chosen to become a member by making donations through PayPal to further the research and publishing work at the SRSrocco Report.