Two of the largest US shale gas producers are halting key projects, as the once buoyant industry continues to cool.
Continental Resources and Whiting Petroleum are halting fracking operations in Bakken, an area which has been one of the biggest drivers of the US shale gas boom.
Leaving wells drilled but uncompleted enables shale gas firms to cut costs while oil prices remain low, but they’re left well positioned to spring them back into production if crude prices subsequently recover.
Continental Resources yesterday reported a net loss of $139.7m in the year ago period, while Whiting posted a $98.7m loss.
It comes as some of the US' biggest banks are setting aside larger sums of money to cover potential energy-related losses.
JP Morgan reported a $500m increase in provisions for expected losses on energy loans, while Wells Fargo said it's set aside $1.2bn in reserves for this.
It marks a change of tune since JP Morgan said last month that oil companies were “surprisingly resilient” to tumbling oil prices, while Wells Fargo said the impact of losses from loans to energy firms was “relatively immaterial”.
Opec has resisted production cuts despite oil prices plummeting since June 2014 to try and price out the US shale gas producers. While the industry has proved more resilient than most analysts expected, the cracks are beginning to show.
The International Energy Agency expects US shale oil production to fall by 600,000 barrels per day (bpd) this year and another 200,000 bpd in 2017.