From Forbes
Investors betting on a rebound in oil prices by investing in US shale producers risk throwing good money after bad, a new report claims.
Despite the recent oil price collapse, the analysis, by UK-based think tank Carbon Tracker Initiative, shows that 10 times as much equity was issued in the first quarter of 2016 than in the last three months of 2015, the highest level since at least 2011. Investors committed $8.9 billion to the sector in Q1 even though most new US onshore shale production is uneconomic at present oil and gas prices, says Carbon Tracker, which highlights the climate change risks that investors face.
The plunge in global oil prices has exposed sharp divisions between US shale producers, with some struggling to stay in business under the burden of unsustainable debt levels, says the report, adding that “investors could face a bumpy ride as equity finance surges in 2016”.
