SHALE OIL NEXT VICTIMS: The Major Oil Companies

As the situation continues to deteriorate for the small to mid-sized shale operators, the next victim will be the major oil companies.  If you think I may be exaggerating, the data and charts reveal that the major oil companies are already struggling to make money producing shale.  And, when the overdue U.S. and global recession finally arrives, it will make a bad situation even worse for these oil majors whose history goes back more than 100 years.

I had planned to write an article on this subject matter, but I thought it would be better if I explained the information from these charts in a video presentation.  Unfortunately, I believe the market has overestimated the ability of these major oil companies, ExxonMobil, Chevron, and ConocoPhillips, to be successful in their risky shale oil venture.

I say risky because I have been writing about the negative consequences of the Shale Industry since 2013.  Furthermore, I knew that mining giant BHP Billiton’s stake in the U.S. Shale Industry was a big mistake in my July 2017 article, DOMINOES BEGIN TO FALL: BHP Chairman Says $20 Billion Shale Investment “MISTAKE.”

Then, a few months later, I posted this article, BHP Billiton: World’s Largest Mining Company To Exit Its $50 Billion Shale Oil Blunder.  Now, some would say that BHP was a mining company, so they shouldn’t have moved into shale because they don’t focus on energy. While that makes logical sense, however, the Rapid Decline rate that plagues the shale industry would eventually destroy ANY company that tried to make a go of it, regardless if it was an energy company or not.

In my newest video, SHALE OIL NEXT VICTIM:  The Major Oil Companies, I provide some sobering charts showing how the financial situation has deteriorated for these three major oil companies once they started ramping up shale oil production:

In my research, I have focused the majority of my research on the Shale Oil Ponzi Scheme in the small to mid-sized companies.  After several years of adding a massive amount of debt to continue business as usual, these shale companies are starting to get into serious trouble.  If we look at the next chart, we can see the share price destruction in several of the shale companies after they released weak earnings a few weeks ago:

While this chart is a few days old, the results are still the same.  Whiting Petroleum suffered a near 40% collapse in its stock price when it released poor Q2 2019 earnings.  I believe we are just beginning of the collapse of the U.S. Shale Industry as the majority of these small to mid-sized operators head into PENNY STOCK HEAVEN.

If you want to see how ExxonMobil, Chevron, and ConocoPhillips financial situation has deteriorated since they have moved into shale, you need to watch the charts explained in the video above.

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OutLookingIn
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OutLookingIn

The US dollar global hegemony must be supported by all means available. Since the dollar relies on oil being priced in dollars, to maintain global dominance. Oil production must be maintained at an elevated level, since other producers are threatening the US dollar dominance by pricing oil in other currencies. We may see an off-shoot of this as precious metals gain in value, while the remainder of the commodity market slides ever closer to recession, with oil prices chopping sideways. Case in point; To keep silver from rocketing higher over the past three trading days, the commercials have had to… Read more »

OutLookingIn
Guest
OutLookingIn

As an aside, off topic – silver.
Overall open interest was 238,664 contracts.
O.O.I. is now 234,826 contracts, showing 3,838 shorts exited overnight.
A strong price showing at $+17.00 per ounce.

Sameer Ovalekar
Guest
Sameer Ovalekar

Steve, Can you comment on the oil service companies (SLB, BHGE etc) ?

Johnathan Seed
Guest
Johnathan Seed

While you are right that even the supermajors are seeing less profit/barrel off US shale, they are still profitable and it will therefore take quite some time before their investors cut off access to capital. They’re can still profit in this environment (much the same as certain Canadian producers whose breakevens are just as high, if not higher, than US shale).

Redrum
Guest
Redrum

They are NOT profitable on shale. They are making money on conventional, chemicals etc… but they are getting destroyed by Shale.

Did you not watch the presentation?

Geedard
Guest
Geedard

Great video Steve. Concise and glaringly clear. I believe the primary purpose of the Shale story is not traditionally commercial but rather – political…to: 1) support global political advantage to USA (a tool inside the US foreign policy toolbox) 2) support the dollar global reserve currency status (domination) and its advantages (another tool inside the US foreign policy toolbox) 3) while the party rocks – it provides vast amounts of employment with revenue to the US shale + service and support industries and the much wider supply chain (sand, trucking, pumps, toxic waste disposal and and and) 4) staves off… Read more »

tom jones
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tom jones

Do you know International oil sales are Brent prices.
True they do need to cut CAPEX in Shale less oil on markets price will be back to $70’s again with less cost.
Many shale companies are over paying on everything.

Andreas
Guest

Steve, THANKS a lot. Formidable, proprietary analysis…

Theravaida
Guest
Theravaida

I noticed the point @ which Art Berman didn’t like you using the word “Ponzi scheme” to describe the situation. Although on a micro-miniscule level, I might understand what he’s saying & somewhat agree with him, I felt he was doing truly pedantic hair-splitting that didn’t do any justice to keeping big picture catastrophe in focus. Has he been in communication w/ you at all since all that “arguing”?

Hubbs
Guest
Hubbs

God damn, it’s getting more difficult to get a straight analysis these days. My number of reliable alt-media sources is fading. Jason Burrack at http://www.wallstreetformainstreet.com seems to be a straight shooter. He gave your blog a huge shout out.
https://www.youtube.com/watch?v=RmLaLkR8fes @ 24:08

DisappearingCulture
Guest
DisappearingCulture

Dave Kranzler at InvestmentResearchDynamics.com knows what he is talking about, has the Wall Street and forensic financial analysis training & experience, and I don’t think he is beholden to any big special interests.
I have few heroes; I just look for honest straight shooters.