No. of Recommendations: 6
Apology for using SA but the Washington Post link of the same story faded out and asked for money, the bloody nerve?

We had this discussion a few days back but the level of desperation has become palpable. Anyone with lots of money can produce oil ... oh profits, whole 'nother story. Wells are expensive, lots of wells even more so.

The issue that also bugs me is some of these guys drill wells when there are no pipelines to get the stuff to market and none planned, hoping someone will show up and build one or haul the stuff out by truck?

Anymouse <Singing: "We are falling into sin .... Wheeee!">

Frackers float mortgage bond-like security as capital needs intensify

Oct. 20, 2019 10:32 PM ET|About: Schlumberger Limited (SLB)|By: Douglas W. House, SA News Editor
Desperate for cash, shale companies are banking their capital-raising hopes on a new type of financial instrument that resembles mortgage bonds.

Specifically, it is an asset-back security involving existing oil and gas wells. Producers transfer ownership interests in the wells to special entities that, in turn, issue bonds to be paid off with output revenues over time. Current yields on the highest quality wells are almost 6%, but are higher on riskier assets.

... A range of yield-seeking institutional investors have expressed interest but modeling future production is challenging due to the complex geology of shale basins and large variability between wells according to engineers.

The Wall Street Journal previously reported that thousands of wells drilled in the past five years are less productive that forecast.

Producers have burned through more than $100B since 2014. Existing investors have almost completely cut off the money faucet and banks are expected to lower their credit lines in the coming months.
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