This is from the Haynes and Boone Law Firm's E&P Bankruptcy Report for January 2020 where over 650 oil and natural gas producers, and their lenders, estimated where drilling and completion capital was going to come from in 2020. The survey, by the way, was taken when oil prices were $61; those prices are now $53 and on the express elevator down. 28% of projected CAPEX from cash flow is better than it was in 2019 (21%)... because these guys are out of money and stacking rigs like cord wood.

50% of 2020 capital will come from additional debt or loss/dilution of equity. That's going backwards, not forwards. I did not include the 18% of capital anticipated from joint ventures and farmouts, which generally also results in loss of equity, particularly when proven undeveloped reserves are involved in an agreement to share future development costs.

The hope that "consolidation" between shale oil companies will save the day is baseless. That's going sideways. Who in their right mind wants to assume more of somebody else's debt, on top of their OWN debt, and be forced to engage in more drilling obligations due to loan covenants, obligations to deliver product under hedge agreements and continuous drilling commitments...when THEY have no money. To realize the value in a consolidation you have to drill more stinking wells. Who, exactly, has the money to do that?

While this is all going on some $83 billion of long term debt from the dark past is maturing in the next 24 months. Some companies are keenly refinancing long term debt now, instead of later, and some of that stuff is costing a whopping 8.5-10.25% interest rates. Mighty Chesapeake Energy now uses half of its net production revenue just to pay interest on long term debt.

Below we can get a look-see why, exactly, only 2% of 2020 CAPEX might come from capital markets: