This is Billy Dee Bits, the CEO of Shale R Us, LLC in his plush office suite in Oklahoma City in late November, 2014. He has recently borrowed $300,000,000 (junk bonds, at 9% interest rates) and is sitting at his desk giving his VP of Operations the go ahead to invest in shale oil wells as fast as he can click his computer, one after another; "boom, boom, boom." Long laterals, short laterals, sliding sleeves, perf and plug, whatever. "Thanks to eTrade," which he really means to say, thanks to junk bonds, reverse credit swaps, dilution of stock value and mezzanine financing on all of its debt, "its easy."
Unfortunately, all of his colleagues also in the shale oil biz across the country have also been drilling shale oil wells with borrowed money, one after another..."boom, boom, boom."
Then, as fate will have it, 4.8 million BPD of LTO suddenly appears on the world oil market that the world does not need and the price of oil begins to collapse; from $97.00 a barrel eventually all the way down to $27.00 a barrel.
Mr. Bits, watching the price of oil tank before his very eyes, is quick to recognize he has likely made a really BIG mistake that, unfortunately, cannot be taken back. You'd hurl too if you were in his shoes...
Actually, that would be another big mistake. Mr. Bits has lost his entire life savings, and all of his lenders money, numerous times. We suspect he will survive this and be back...with more OPM, soon.