The tide is going out in US shale stocks
US shale stocks were down around 25% on Friday.
Marketwatch looks at 10 shale stocks that have been particularly hard hit. They’re down 18-35% today.
Producer Clayton Williams, for instance is down 24.5% today but 61% since the summer. Larger economic problems only start if/when these companies fall into bankruptcy but with shares still at $58.77, that’s a long ways away.
Even then, companies have been able to raise capital so cheaply. The company only has $650m of debt. Other companies falling hard today like Bonanza Creek and Rex Energy have around $1 billion in debt.
The shakeout in oil and shale right now brings to mind Warren Buffett’s best axiom:
“Only when the tide goes out do you discover who’s been swimming naked”
Shield your eyes.
Look away Warren!
