Fracking Oct 2014 still not making money
Even with crude prices above $100 a barrel, U.S. independent producers will spend $1.50 drilling this year for every dollar they get back from selling oil and gas and will carry debt that is twice as much as annual earnings, said Ryan Oatman, an energy analyst with SunTrust Robinson Humphrey Inc., an investment bank in Houston.
August 13, 2014
Based on data compiled from quarterly reports, for the year ending March 31, 2014, cash from operations for 127 major oil and natural gas companies totaled $568 billion, and major uses of cash totaled $677 billion, a difference of almost $110 billion.
To fill this $110 billion hole that they’d dug in just one year, these 127 oil and gas companies went out and increased their net debt by $106 billion. But that wasn’t enough. To raise more cash, they also sold $73 billion in assets.
According to their financial statements, 20 of the largest oil and gas companies reported a total of $133.3 billion in U.S. pre-tax income from 2009 through 2013. These companies reported total federal income taxes during this period of $32.1 billion, giving them a federal effective tax rate (ETR) of 24.0 percent. Special provisions in the U.S. tax code allowed these companies to defer payment of more than half of this tax bill.
In a nutshell, the top 20 oil and gas companies still owe $16.5 billion (more than 50%) to Uncle Sam in tax revenue.
IN 2009, Kelcy Warren’s Energy Transfer companies were relatively small-time players in the pipeline industry, a less than two-decade-old operation still focused on transporting natural gas around Texas.
But Energy Transfer has had to borrow heavily to fund its multibillion-dollar takeovers and pipeline build-out. As of June 30, the company counted a debt load of $US25.9
$106 billion + $16.5 billion = $ 122.5 billion + 25.9 billion = $148.4 billion
At this rate of growth the Fracking industry will be over a trillion dollars in debt very soon. What happens if the Oil Companies that owe taxes to the Government cannot pay? The Federal Budget assumes they will pay but every year their debts just keep growing larger. Will Social Security payments be cut?
Why do bankers still get paid if the deals they finance end up costing tax payers? Obama and Rand Paul claim that the Free Market can both regulate itself and does a better job running a business than government can, Bankers claim they can identify then allocate capitol to the most deserving industries better than the government can. They forgot it was the banks who asked the government for a bailout and not the other way around.
When the Fracking Industry debt reaches $1 trillion will the banks ask for another bailout or will they keep gambling? How much do they have to lose before they hit rock bottom?