After bemoaning our reliance on foreign oil ever since the OPEC-induced shortages of the 1970s, the US’ crude oil production now stands at record highs of ~12 MM barrels/day. Although lower costs of extracting oil have made the sector much more attractive for new entrants, the resulting new supply shock has also caused all kinds of volatility in oil prices. Back then, nimble distressed-securities specialists were able to short-sell numerous oil and gas exploration and production (E&P) firms which had taken on too much debt. As their cash flows ran dry, many of these E&P firms were forced into bankruptcy with their pre-petition shareholders substantially diluted or even wiped out. The super-major oil producers—Royal Dutch Shell, ExxonMobil, et al.—weren’t hit too badly when oil prices plummeted a few years ago.

Source: Forbes May 24, 2019 11:27 UTC