re: There’s more oil and gas than ever — and the industry is tanking

Shale oil has led many companies into the prisoners dilemma. They have to continue drilling to cover up the super high decline rates and service their immense debts. Shale gas works and is a viable investment at high enough gas prices. When the US independents flooded the gas market they moved into shale oil which has accounted for a huge majority of the new supply over the last decade. We now are oversupplied on oil while much of what is being produced in the US is uneconomical. Banks have tightened access to credit but until these indebted drillers either make money organically through their own operations or are forcefully removed from the market the oversupply continues. My guess is that prices will push higher and the majors will own most of the desirable assets left for pennies on the dollar. The indebted smaller drillers will die and a leaner healthier industry will emerge. There is also the fact many of these producers have over drilled their resource plays with well spacing that was much too close and caused lower oil recoveries on existing wells. Equity in many of these companies is worth zero.