Finances of Fracking: Shale Industry Drills More Debt Than Profit

Since 2007, the oil and gas industry has lost $280 billion betting on the shale boom, which has been made possible by hydraulic fracturing (fracking) and Wall Street financing, and these companies are still borrowing heavily. But even as the industry struggles to recoup costs — much less profits — by continuing to borrow and drill, the great promise of the shale revolution is also threatened by another specter: declining production at each well.

In this series, DeSmog’s Justin Mikulka and Sharon Kelly investigate the finances of the fracking industry and how falling fossil fuel output and questionable lending practices reminiscent of the mid-2000s housing bubble may be setting up another bubble, one with a bill that may ultimately be paid by American taxpayers and the planet.

Image: Wyoming's Jonah gas field is marked by a network of well pads, roads, and pipelines. Credit: Bruce Gordon, EcoFlight, CC BY 2.0


In this series

Aerial view of North Dakota oil fields and roads
More than a decade ago, fracking took off in the Bakken shale of North Dakota and Montana, but the...
By Justin Mikulka, 8 Aug, 2020
Dozens of drilling rigs are stacked at the Patterson-UTI yard in Midland, Texas after the oil price went negative on April 20, 2020. Midland, Texas. May 27, 2020.
Warren Buffet has a famous quote about investing: “Only when the tide goes out do you discover who'...
By Justin Mikulka, 17 Jul, 2020
empty streets
The oil, gas, and petrochemical industries have taken a massive financial blow from the COVID-19...
By Sharon Kelly, 16 Apr, 2020
Permian Basin oil operations
The finances of the oil and gas industry are so dismal that the major banks that have funded the...
By Justin Mikulka, 13 Apr, 2020
A drilling rig on a former ranch outside of Bartsow, Texas in the Permian Basin.
At the same time a price war is raging in the global oil markets, a regional price war is playing...
By Justin Mikulka, 3 Apr, 2020
Antique truck rusting in the oil fields of Reeves County, Texas, in the Permian Basin.
The Washington Post reported March 10 that the Trump administration was considering some type of...
By Justin Mikulka, 27 Mar, 2020
LNG carrier
Last year, the financial prospects for the North American natural gas market were looking grim, as...
By Justin Mikulka, 11 Mar, 2020
Donald Trump
Oil prices collapsed today amid falling energy demand and the global response to the novel...
By Sharon Kelly, 9 Mar, 2020
typewriter reading 'fraud'
In a 2016 interview with Fraud Magazine, former Enron CFO Andrew Fastow explained what he thought...
By Justin Mikulka, 5 Mar, 2020
aerial view of West Texas oil fields
As oil prices plummet, oil bankruptcies mount, and investors shun the shale industry, America’s top...
By Justin Mikulka, 21 Feb, 2020
Ad in Houston Airport mentioning declining Permian oilfields
In mid-January, Adam Waterous, who operates the private equity firm Waterous Energy Fund, made a...
By Justin Mikulka, 3 Feb, 2020
XTO well pad blowout in Belmont County, Ohio
On February 15, 2018, a fracked natural gas well owned by ExxonMobil's XTO Energy and located in...
By Justin Mikulka, 23 Jan, 2020
Equipment for reclamation of an old oil and gas well in the eastern U.S.
In over their heads with debt, U.S. shale oil and gas firms are now moving from a boom in fracking...
By Justin Mikulka, 20 Dec, 2019
Oil Fields Near Stanton, TX
This month, the energy consulting firm Wood MacKenzie gave an online presentation that basically...
By Justin Mikulka, 17 Dec, 2019
The company that for the past decade has been emblematic of the rise and pitfalls of shale drilling...
By Sharon Kelly, 6 Nov, 2019
California and Colorado’s public pension funds together lost out on over $19 billion over the past...
By Sharon Kelly, 5 Nov, 2019
Fracking sites at night in Colorado
This week, the Wall Street Journal highlighted that the U.S. oil and gas shale industry, already...
By Justin Mikulka, 3 Oct, 2019
Greenhouse gas emissions from flaring and venting a fracked gas well
At a recent natural gas industry conference in Houston, Woodside Petroleum CEO Peter Coleman warned...
By Justin Mikulka, 27 Sep, 2019
Drilling rig at twilight
In early 2018 when major financial publications like the Wall Street Journal were predicting a...
By Justin Mikulka, 8 Aug, 2019
Older adults on a beach bench
A year ago, Chesapeake Energy, at one time the nation’s largest natural gas producer, announced it...
By Sharon Kelly, 25 Jul, 2019
Permian Basin
On Monday, the Wall Street Journal featured a profile of Scott Sheffield, CEO of Pioneer Natural...
By Sharon Kelly, 24 Jun, 2019
Steve Schlotterbeck, who led drilling company EQT as it expanded to become the nation’s largest...
By Sharon Kelly, 23 Jun, 2019
Oil pumpjack at sunset
Warren Buffett, CEO of investment holding company Berkshire Hathaway, is considered one of the top...
By Justin Mikulka, 14 May, 2019
Gas station sign reading 'Exxon' and 'On the Run'
After a decade of the American fracking industry burning through hundreds of billions of dollars...
By Justin Mikulka, 18 Apr, 2019
Clippy paperclip art on fracking drill well pad
Two years ago, the U.S. fracking industry was trying to recover from the crash in the price of oil...
By Justin Mikulka, 12 Mar, 2019
Bridge over river with wind turbines in background
Los Angeles Mayor Eric Garcetti recently announced the city is scrapping plans for a multi-billion-...
By Justin Mikulka, 22 Feb, 2019
natural gas flare
The fracked gas industry's long borrowing binge may finally be hitting a hard reality: paying back ...
By Justin Mikulka, 7 Feb, 2019
Pumpjacks in Permian Basin outside Midland, Texas
In 2015, Pioneer Natural Resources filed a report with the federal Securities and Exchange...
By Sharon Kelly, 10 Jan, 2019
Gas flare
2018 was the year the oil and gas industry promised that its darling, the shale fracking revolution...
By Justin Mikulka, 18 Dec, 2018
Fracking well sites from the air, in Jonah, Wyoming
In 2016, lower oil prices led to an overall drop in production for shale companies, which use...
By Justin Mikulka, 30 Oct, 2018
Sign reading "hot water"
The U.S. Environmental Protection Agency (EPA) has clearly documented the multiple risks — despite...
By Justin Mikulka, 18 Sep, 2018
In the climactic final scene in There Will Be Blood — arguably the greatest movie about the oil...
By Justin Mikulka, 10 Aug, 2018
Deepwater Horizon oil rig on fire in Gulf of Mexico
The oil and gas industry is finally acknowledging how dangerous employment can be for its workers...
By Justin Mikulka, 19 Jul, 2018
Fracking rig workers
At a recent industry conference, Terry Spencer, head of natural gas infrastructure company ONEOK,...
By Justin Mikulka, 29 Jun, 2018
Oil pumpjacks in silhouette
Back in 2011, The New York Times first raised concerns about the reliability of America's proved...
By Sharon Kelly, 14 Jun, 2018
Flip this well logo on top of oil pumpjacks
Last year the fracking company Halcón Resources announced a new strategy that was sold as the path...
By Justin Mikulka, 29 May, 2018
Stock market numbers over oil drill pumpjack
Most people probably aren’t familiar with the acronym ZIRP. It stands for zero interest rate policy...
By Justin Mikulka, 11 May, 2018
Solar panels and oil pumpjack
About a half decade ago, as the shale drilling rush was sweeping across the U.S., drillers needed...
By Sharon Kelly, 6 May, 2018
Wall Street sign
The U.S. shale oil industry hailed as a “revolution” has burned through a quarter trillion dollars...
By Justin Mikulka, 4 May, 2018
A Scrabble board spells out 'Bankruptcy' overlaid on an unconventional oil and gas rig
EOG Resources is one of the top companies in the fracking industry, and thanks to the new tax bill...
By Justin Mikulka, 26 Apr, 2018
Gas pump
Shale oil, which the Energy Information Administration projects will represent a rising proportion...
By Sharon Kelly, 24 Apr, 2018
Balmorhea State Park with views of oil and gas well flares
If you ask the CEO of Apache Corp., his company made in 2016 the kind of once-in-a-lifetime find...
By Sharon Kelly, 19 Apr, 2018
Natural gas drilling well pad in Wyoming
In 2008, Aubrey McClendon was the highest paid Fortune 500 CEO in America, a title he earned taking...
By Justin Mikulka, 18 Apr, 2018