The Shale Bloodbath Is Yet To Begin

``There are two reasons why the financial position of U.S. shale companies could darken in the months ahead. First, many oil companies hedged their production ahead of the price downturn, locking in prices for their product that insulated them through the early months of the price collapse. Those positions will begin to expire this year and as they are unwound many firms are becoming more exposed to low prices--companies that have been protected up until now will start feeling the pain. A second reason that is another round of credit redeterminations will hit the industry... . More banks could cut off their borrowers this fall, potentially forcing some drillers into a liquidity crisis.''