The collapse of the OPEC-plus deal restricting crude oil production and the ensuing price dive is likely to have a disproportionate impact on companies focusing on the extraction of shale oil in the United States, Rigzone reported on March 12.
Carlos Gomes, a London-based oil and gas analyst for Edison Group, told the website that current market conditions were putting more pressure on shale oil developers than on other upstream U.S. operators. This is because many shale operators are using a business model that leaves them highly leveraged, and thus vulnerable to price volatility, he said.
“As it [has been] observed, companies like Hess Corp., Occidental Petroleum and Chevron already had severe losses,” Gomes remarked. “On the other side of the spectrum, companies that are highly hedged, focused on conventional production, with lower operating costs are more protected [from] the current low oil price environment.”