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[SMM] Oil prices plummeting Shale oil companies have struggled and large oil companies have filed for bankruptcy
Apr 2,2020 16:31CST
The content below was translated by Tencent automatically for reference.

"[abnormal] Trump says the crude oil market for Russia and Saudi Arabia may reach a production agreement to rebound sharply

SMM4, March 2: oil prices plummeted to the lowest level in nearly 20 years, as many parts of the world in the form of blockade cities to combat the epidemic, market demand for oil shrank, oversupply is becoming more and more serious.

From: Kim Shih data

U. S. President Donald Trump can't sit still in the face of falling oil prices. Trump held talks with Russian President Vladimir Putin on Monday, saying he and Russian President Vladimir Putin had reached an agreement on the importance of stabilizing the energy market, and the two sides agreed to hold energy ministerial consultations on the oil market.

Prior to Trump's call with Putin, US Secretary of State Pompeo also called Saudi Arabia's Crown Prince Salman Jr. in the hope that he would shelve a record increase in production after a fall with Russia. According to people familiar with the matter, the Trump administration wants Saudi Arabia to shelve its plan to increase crude oil production to 12.3 million barrels a day in April and to help bring oil prices back to where they were before the crash in early March.

In just a week, the United States sent a series of signals to Saudi Arabia and Russia to mediate the price war. Many energy experts have recently said that the United States may lose its position as the world's number one oil producer this year as a result of the recent collapse in oil prices, falling demand and a sharp drop in capital investment.

The first large shale oil manufacturer in the United States to fall

Whiting Petroleum, the US shale oil company, announced on Wednesday that it had filed for bankruptcy, suspending its shares on the New York Stock Exchange, becoming the first large US shale oil producer to fall since the outbreak of the international oil price war.

Whiting Petroleum said in a statement that it had to restructure its finances as a result of the oil price war between Saudi Arabia and Russia and the impact of the Xinguan pneumonia outbreak, which had led to a "serious downturn" in crude oil and natural gas prices.

Whiting Petroleum said it would continue to operate, with suppliers, partners and employees unaffected by bankruptcy restructuring and expected to produce about 42 million barrels of crude oil by 2020.

Headquartered in Denver, Whiting Petroleum is one of the major shale oil companies in Bakken, North Dakota, and the largest oil producer in Colorado.

Cowen Inc. Analyst David Deckelbaum expects Whiting to need at least $50 a barrel to make ends meet.

A large number of companies have begun to cut spending. Share prices of energy companies have fallen.

Many shale oil producers said they would cut drilling budgets and reduce drilling rigs, such as Apache (Apache), a medium-sized US oil producer, which said it would cut its budget by 37 per cent, particularly by phasing out all rigs in the Permian basin. in addition, the company said it would cut its dividend spending by 90 per cent. Devon energy company (Devon Energy) also announced a 30% cut in spending, focusing on Oklahoma and Wyoming.

Western Petroleum (Occidental Petroleum), one of the largest shale oil producers in the United States, has announced that it will not be able to pay $2.8 billion in dividends on schedule and continue to invest to maintain existing production without adding additional debt. The company plans to cut its quarterly dividend to 11 cents from 79 cents from July and cut spending by about 32 per cent to $3.6 billion this year, while its market capitalisation has shrunk to $11 billion from a high of $46 billion last year.

In addition, Devon and Murphy Oil have decided to cut their budgets by 1/3.

Shares of American oil companies have been hit hard recently, with energy stocks, including Chevron, Western Oil, Apache, ExxonMobil and ConocoPhillips, all falling sharply. In this case, it may be difficult for US shale oil companies, which are already highly indebted, to raise money by borrowing.

"[focus] the collapse in oil prices has led to a surge in freight rates for oil tankers snapped up by many countries.

The United States has grown into the world's largest oil and gas producer, but current oil prices are below the production costs of many American drillers. ExxonMobil, Western Petroleum, Chevron and Crownquest Operating LLC drilled wells in Permian basins to make a profit of $31 a barrel, according to Rystad.

As many as 70 per cent of the 6000 oil exploration companies in the US could eventually fail as a result of the epidemic and the oil price war, according to analysts. In addition, if WTI crude oil stays low for the next three months, US listed companies and private producers will be forced to shut down production on a large scale, and only the supergiants will be able to tide over the difficulties.

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