Hedge fund manager Jim Chanos famously called U.S. shale producers “creatures of the capital markets” for their heavy reliance on external sources of funding to grow. He has a point.
The shale industry has historically sought more than 40% of the capital it needs from debt and equity markets, and its appetite for outside financing to fuel the U.S. oil and gas boom of the last decade has been downright voracious. According to a Wall Street Journal analysis of FactSet data, the companies behind the boom have spent $265 billion more than they generated from operations since 2010.
