► The falling oil price has had many consequences, both politically and economically. In this article we look at the financial effects and, in particular at the shale oil industry.
► We give a brief history of its development and show how its combination of a high cost of production and higher debt funding, together with some technical failings, have led to the difficulties it now finds itself in.
► We also briefly consider the two ORB born oil and gas bonds, from Premier Oil and EnQuest.
► Both are trading with yields over 20%, a level many consider distressed, and outline some of the issues for investors.
► Reflecting the growing importance of this market to both retail investors and issuers, Hardman & Co has produced the following detailed report. This work has been undertaken by our Financials Analyst Brian Moretta.
The falling oil price has had many consequences, both politically and economically. In this article we look at the financial effects and, in particular at the shale oil industry. We give a brief history of its development and show how its combination of a high cost of production and higher debt funding, together with some technical failings, have led to the difficulties it now finds itself in.
We also briefly consider the two ORB born oil and gas bonds, from Premier Oil and EnQuest. Both are trading with yields over 20%, a level many consider distressed, and outline some of the issues for investors.
