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Coronavirus Oil Collapse Continues, as U.S. Rig Count Hits 45-Year Low

US Oil Rig Count Hits Record Low Amid Coronavirus Pandemic | Texas Oilfield Injury Lawyer

The oil industry collapse brought on by the global coronavirus pandemic is reaching far beyond the Permian Basin, as an unprecedented rush to shut-in wells by drillers across the nation brings the American shale boom to an abrupt and catastrophic end.

According to Bloomberg News, the U.S. rig count fell by 37 last week, to 274 – the lowest since 1975. The nation’s oil output has decreased by 1.2 million barrels a day, or 9.2%, since hitting 13.1 million in the second week of March.

“This is an unprecedented downturn,” EOG Resources Inc. CEO Bill Thomas said during a conference call with analysts. “U.S. oil production is in severe decline and it could take years for domestic production to turn around. We believe that the historic and prolific oil-production growth by U.S. shale may have been forever altered.”

Oil Demand Plummets Amid Coronavirus Lockdowns

COVID-19, the novel coronavirus, has infected more than 4.2 million people throughout the world and killed over 287,000. Since the virus began sweeping across the globe, the citizens of nearly 200 nations have been ordered to remain at home and avoid non-essential travel.

Although lockdowns are easing in some places, the pandemic is far from over and will likely continue to staunch demand for oil into the foreseeable future.

As a result, Benchmark American oil futures have plummeted 63% from a January high of $65.65 per barrel and even fell into negative territory on April 20th. While the market has recovered somewhat, prices continue to hover between $20-$25 per barrel – far too low for drillers to turn a profit.

The number of frac crews working in the United States has fallen by 8 to 47, the lowest since 2014. The Permian Basin in West Texas and New Mexico shed another seven crews last week, leaving just 32 operating in the nation’s largest shale play.

Oil and Gas Company Bankruptcies Have Started

Meanwhile, it’s becoming more and more apparent that some drillers and oilfield services companies – especially those that took on massive debt during the boom years — won’t be able to survive the unprecedented downturn. According to Bloomberg, seven – including Whiting Petroleum and Houston-based Diamond Offshore Drilling – have filed for Chapter 11 bankruptcy since the beginning of the year – and there’s likely more to come.

On Monday, Chesapeake Energy disclosed it was exploring a possible Chapter 11 filing. And earlier this month, the Louisiana Oil and Natural Gas Association warned that nearly half of its member could seek bankruptcy protection in the near future.

“The longer that we are shut down because of COVID-19, that number’s going to continue to rise,” Patrick Jankowski, senior vice president of research for the Greater Houston Partnership, said during a recent interview with Houston Public Radio. “At first, it’ll just be a few percentages of the businesses, and if we end up being shut down through the summer, you’re going to see that number increase perhaps into the teens.”

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Our Undefeated Oilfield Accident Lawyers continue to monitor the impact of the global coronavirus pandemic on oil and gas workers in Texas, Louisiana, New Mexico, and across the United States and will post updates as new information is made available.

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