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In spite of higher oil prices, rising natural gas prices and much higher well productivity, only 21% of US shale industry's CAPEX requirements for 2019 will come from cash flow. A whopping 78% of all shale oil, shale gas companies and lenders surveyed In September 2018 by Haynes and Boone expect to INCREASE their respective borrowing bases in in 2019.

America needs its shale resources. Badly. But things are NOT getting better financially for the shale industry. The data to substantiate that is not gurgling in one's "gut" and its not in investor presentations; you can find it by reading 'everything-is-always-peachy' stuff on Forbes, or Seeking Alpha, or the IEA, or groups paid by shale companies to lobby Washington DC...its in traditional full cost accounting methods filed with the Securities and Exchange Commission.

The burden of legacy debt is now so onerous that it will take $110 dollar oil and $5 gas, sustained for a loooooong time, just for the shale industry to get back to even. For the US LTO industry, using its own "breakeven" numbers and corresponding net back oil prices, or its "take home pay" from one barrel of oil at current prices ($70 NYMEX WTI), it will have to produce 9 billion barrels of oil, as much as it has already produced the past 10 years...just to pay back its current debt !

How much more money will the shale oil industry have to borrow to produce those 9 billion barrels? According to the Haynes and Boones survey, at least as much as it has already borrowed. The Red Queen, she's a going wide-ass open right now...and still using OPM.

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