VOODOO ECONOMICS: ‘Magnificent Folly’, A Sucker’s Born Every Minute | RIELPOLITIK
What does the above chart tell us? Only that the very best shale operator in the world operating in the very best shale play in the world sees an 82% decline rate in average well output in the first year.
Which means that if that well has not entirely paid itself back within that first year, it probably won’t generate *any* returns for bond or shareholders to enjoy. Ever.
It also means that all the debt and equity capital poured into the ground between 2008-2017 is now “invested” in wells that are, effectively, depleted.
Bluntly, if the returns have not already happened on those monies, they probably never will. How could they? The wells are mostly drained.
The table below shows the equity losses for a small sampling of afflicted companies. Hundreds of other shale companies have already gone completely bankrupt with similar staggering bond losses to “investors”.