$20 Oil the new bottom! Record bankruptcy filings expected this year!
Bloomberg see's $20 oil as a reality that is fast approaching! Analyst concluded oversupply of the black gold will continue throughout 2016 and into 2017 before a modest recovery begins.
This is not good news for U.S. Shale producers who are over leveraged and deep in debt. Rig counts, which official numbers are expected to be released this Friday, will show a 70% decline in Oil and Natural Gas rigs in the U.S. from a little over a year ago.
With such a bleak growth outlook for the industry going forward, Analyst expect producers who are carrying a high debt load, will not be able to sustain pumping at a loss to service the debt, which many have been doing throughout 2015 to stay alive.
This cannot continue and it is expected that 30-50% of all companies, not just producers, but supply and service companies as well serving the industry, will go bankrupt this year barring a major event to propel prices higher.
Conclusion, the U.S. could see a very severe contraction in the number of companies operating in the shale industry, an industry that has now gone from boom to bust.
