The oil and gas industry is in sad shape, and unless executives begin overhauling their business plans and expectations soon, investors will lose more money, and workers will lose more jobs.
Five years after OPEC allowed crude prices to tank, some U.S. executives and analysts are still promising that an oil shortage is around the corner. But the world is changing faster than these folks can comprehend, and energy executive stubbornness is holding the industry back.
The mantra among Texas oil executives is drill, baby drill, and they have saddled their companies with billions in debt to get steel in the ground. Now, these companies are falling like flies, with 26 exploration and production companies filing for bankruptcy so far this year, according to the Wall Street Journal. Twenty-eight filed in 2018.
S&P Global Ratings added 30 more oil and gas companies to its distressed borrowers’ list in August, a considerable number that indicates that a third of oil and gas companies are in danger of defaulting on their debts. Half of the industry’s debt will come due by 2024, leaving little time for prices to rise and save the day.
For the first time since 1925, Exxon Mobil is not one of the 10 most valuable companies in the S&P 500. The Texas-based corporation was once the most valuable company in the world, but today, oil companies are no longer as crucial to the global economy.
Both supply and demand are hurting oil and gas prices, and therefore the industry.
Innovative engineers have released more oil and gas from more corners of the planet than the world needs. The U.S. has gone from the largest importer of oil to the largest producer. The Organization of the Petroleum Exporting Countries keeps cutting production to boost prices.