Producers’ assets not worth as much as they thought
Tuesday, August 18, 2015
The trend has been evident in most oil and gas drilling companies: prolonged depressed commodity prices has producers cutting back on rigs, employees and production in order to make ends meet. Pittsburgh Post-Gazette PowerSource reports that companies taking impairments worsen their financial situations.
Impairments are a company’s reduction in capital. In other words, when a company’s actual cash from a development is lower than the company’s assets calculation, the company reports an impairment. Impairments are common nowadays while prices sink.
Some Pittsburgh-area oil and gas operators have reported impairments. Rex Energy, for example, had $117.8 million in impairments for the second quarter alone. Consol Energy Inc. reported a second quarter impairment of $828.9 million.
Via: Pittsburgh Post-Gazette PowerSource > When prices tank, write downs flourish
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Shale FAQ
What is fracking?
Fracking is a slang term for hydraulic fracturing. Fracturing is a process by which highly pressurized fluid is pumped thousands of feet into the ground to fracture rock formations. The goal is to release the natural gas that’s locked inside the rock.
Is it safe?
What most concerns people about fracturing is ground water contamination. The worry is that fractures underground, caused by the process, will extending upwards and into aquifers, releasing gas and chemicals into the ground water supply. There’s been no confirmed reports of such a thing happening. Though surface spills and drill site blowouts can lead to localized environmental concerns.
Will my water catch on fire?
Flammable water is caused by the release of methane gas into a drinking water supply. Methane gas occurs naturally and can be released by any kind of drilling, including water wells. In Pennsylvania officials fined Chesapeake Energy $1 million for contaminating ground water with methane. It was determined that the company had not properly cemented it’s boreholes and gas migrated up the well, between rock and into aquifers.