Warning: This “Safe Energy Industry Is In Danger”
An unidentified oil worker walks in front of a natural gas flame burning off in the Persian Gulf desert oil field of Sakhir, Bahrain (Image: AP/H. Jamali)
The canary at the drill rig just croaked.
Last week, one of the largest energy companies in the U.S. – and a major darling of the shale or “fracking” industry — started showing major signs of distress.
“Chesapeake Plunges 40% on Report It Hired Restructuring Adviser” shouts the headline from Bloomberg.
Chesapeake is closing in on bankruptcy? This is big news. And whether you’re an energy investor or not, there’s much to be gleaned from this huge story. Today, most of the major financial indexes are following the price of crude oil and the energy sector. As the drill bit goes, so does the market. And right now things are getting scary – which, as I’ll share in a moment, could be bad news for one “once safe” sector.
With oil trading hands for less than $30 a barrel, there’s major strain on the American fracking industry. For most American oil companies, $50-60 dollars a barrel is needed just to break even. The same goes for gas companies like Chesapeake, natural gas prices are far below most frackers’ break even.
Read more: Business Insider