US shale producers are expected to post their worst quarterly results for the second quarter since 2016 due to the coronavirus pandemic which ravaged oil demand, prices, and production, according to a Reuters report. Crude oil futures have been down around 35% since January as lockdown measures crushed fuel demand.
Excluding impairments, US shale producers are set to record the worst operating results since the last oil crash in 2016, the report said. ConocoPhillips is expected to swing to a 49 cents/share loss in the second quarter, compared to a $1.40/share profit in the same period last year. Most major shale companies, including EOG Resources, Pioneer Natural Resources, Continental Resources, and Parsley Energy, are also seen to report quarterly losses in the next couple of days.
US shale producers curtailed about 2 million barrel production due to low prices in April and May. Some of the reduced output was revived in June as prices rebounded to around $38/barrel. However, analysts said the output rebound would likely be temporary, with production expected to decline over the next couple of years.
US shale companies could write off about $300 billion in assets starting from the third quarter, that might spark new bankruptcies, consulting firm Deloitte said. Law firm Haynes and Boone said 18 shale firms, including Chesapeake Energy and Whiting Petroleum, filed for bankruptcy in the second quarter, compared to five in the prior quarter. Dan Eberhart, the CEO of oilfield services firm Canary, LLC said many shale assets are simply not economically viable even as prices rebound to today’s level.
