After the big boom, we may be about to see the big fall: Goldman Sachs has built a scheme to understand which shale companies may fall apart before everyone else
When it comes to answering the question: “Is the company X going to default ?”, the answer comes from the dear old balance sheets.
Goldman Sachs made its own analysis on the data, and the US shale industry looks a little bit like this:
Look at the list of companies on the lower side of the chart, move your eyes on the right.
The “Group #4″ is not in a great situation at the moment. If banks will really start to deny loans renewal to most of these companies, we may see a sharp decline in the whole industry.
We’re not seeing this is 100% bad (after a big boom, a relevant fall is necessary to “clean out” the uncompetitive competitors), but we may want to keep an eye on the US shale industry in the coming months.