It is a tab that producers, pipeline operators and oil-field service companies have run up battling the Organization of the Petroleum Exporting Countries for global market share.
It is unclear how they will repay it all. Shareholders and private-equity investors have been burned in recent years attempting to buy at the bottom. Banks are in retreat. Bond markets have shown little indication that they are open to any but the oil patch’s most attractive borrowers.
Analysts are predicting and investors hoping that the specter of debt maturities will prompt companies to do what low commodity prices and prodding from shareholders haven’t: stop drilling so many wells.
“Capital markets are putting enormous pressure on companies to behave like real economic vehicles,” said Ian Nieboer, managing director at RS Energy Group, an industry consulting firm. “A select group will be supported and others will have to be creative.”
Easy credit and enthusiastic investors fueled the North American shale-drilling boom that flooded the world with oil and gas.
OPEC, which sent crude prices plunging on Thanksgiving 2014 when it opted to keep pumping despite a glut, has since curtailed output to buoy prices.
Through it all, U.S. companies kept drilling. Average daily oil production has risen 34% since November 2014, reaching about 12.5 million barrels in September, according to the U.S. Energy Information Administration.
The plunge in prices triggered a wave of bankruptcies among oil-and-gas companies, but it didn’t stop investors from betting big on shale.
Companies with combined debt of $171.2 billion filed for bankruptcy protection from the start of 2015 through September 2018, according to data from law firm Haynes and Boone LLP. In that same time more than $250 billion of debt was issued to oil-and-gas companies, according to Moody’s.
Banks reduced the lines of credit they extended to energy producers as the oil-and-gas reserves that served as collateral lost value. Energy producers had little trouble raising cash early on.
North American oil-and-gas producers sold more than $70 billion of new shares after energy prices slumped and used the proceeds to pay down debt and keep rigs drilling. Energy stocks have performed miserably in recent years, though.
Although the sector’s shares have gotten a lift in recent weeks from an uptick in oil prices, shares of more than 50 U.S. exploration-and-production companies tracked by The Wall Street Journal ended 2019 down 50% or more from their highest-ever prices, falling at a time when the broader stock market has surged to new heights.
In the three years after crude prices crashed, private-equity firms raised nearly $200 billion to buy oil and gas assets, according to data provider Preqin. The idea was to buy at the bottom and sell for a profit when oil prices bounced back. Prices haven’t fully recovered, though, and many private-equity energy investments have fared poorly.
A select few companies have been able to sell debt, to be sure. Diamondback Energy Inc. sold $3 billion of bonds in November to pay off higher interest notes, reduce its bank debt and cover other expenses. The West Texas driller, with a stock market value of nearly $15 billion, is a favorite among investors for its plum drilling properties in the Permian Basin, growing dividend and strong balance sheet. According to FactSet, 29 of 30 analysts that track the stock recommend buying Diamondback; one suggests holding the shares.
Most companies won’t have the same options as Diamondback. For them, analysts predict austerity, which means a lot less drilling. Evercore ISI analysts estimate a 5.9% decrease in spending by North American exploration-and-production companies in 2020. Barclays analysts expect 10% less will be spent drilling on land in the U.S.
A lot of companies have pledged restraint, yet their promises to spend only what they earn selling oil and gas are already being put to the test by rising oil prices.
U.S. oil prices gained more than a third in 2019, including an 11% climb in December on OPEC’s promised production cuts. So far, though, producers have held back. The number of rigs drilling in the U.S. was 805 last week, down about 25% from the end of 2018, according to oil-field services firm Baker Hughes Co.
Analysts say that is a sign that producers are sticking to their budgets and harvesting cash from higher oil prices to pay down debt and pay dividends to shareholders rather than spending it drilling more wells.

Work Restarts on Silver Sands Construction Project Destroyed in Fire VIDEO
Nine months after fire destroyed a much-anticipated addition to Milford’s Silver Sands State Park, construction crews are back at work to replace it.
The buildings, which included concessions, a bathroom and changing area, elevated outdoor seating, and a lifeguard office, were supposed to open last Memorial Day weekend.
Walkers who take the Silver Sands boardwalk can now see a new frame constructed for one of the buildings.

Portion of Route 32 in Norwich to close for two weeks starting Monday
Norwich — A portion of Route 32 just south of Falvey’s Motors will be closed for about two weeks beginning Monday to allow construction crews to replace a failing corrugated metal pipe and make drainage repairs, the state Department of Transportation announced.
Signs will be posted for a detour route around the construction zone. Prior to and following the closure, alternating one-way traffic will be needed periodically for some work, which will reduce the duration of the full closure, the DOT press release said.
The $500,000 project involves removing and replacing the existing 43-inch pipe and concrete endwalls and replacing it with a larger, 60-inch diameter reinforced concrete pipe and new concrete endwalls and wingwalls. Utilities have been relocated temporarily and will be returned to their original location during the closure. The pavement will be temporarily patched and then replaced in the spring of 2020.
Brunalli Construction Company of Southington was awarded the contract for the work on Nov. 6, the DOT press release said.

Lamont Declines To Commit To Regional Gas Price Hike
Christine Stuart
HARTFORD, CT –  Gov. Ned Lamont declined to offer his commitment to the Transportation and Climate Initiative proposal that would have Connecticut and 11 other states use higher gas prices to fund cleaner transportation. Asked about the proposal following the Dec. 18 Bond Commission meeting, Lamont said, “We are watching that.”
The plan says that if the region wants to reduce emissions by 25% over 10 years, it will likely have to inflate the cost of gas by as much as 17 cents per gallon. The increase in gas prices is the result of charging fuel and oil distributors for violations of new carbon emission limits in the member states.
The timing of the proposal is not ideal for Lamont. Increasing gas taxes at the same time as he’s trying to get the legislature to approve truck-only tolling could prove difficult for Connecticut’s governor.
“This is a regional effort that our fellow states are watching as well,” Lamont said. “That is not something I’ve signed on to.”
Lamont, who has been largely praised for his climate initiatives, isn’t the one who signed up for the TCI. Former Gov. Dannel Malloy signed up for the initiative before Lamont took office.
Technically, Lamont doesn’t have to give the group a definitive answer until later this year.
In the meantime, he will be lobbied by both sides on the issue.
Environmentalists praised the proposal, which is expected to be finalized in the Spring.
“States are leading the way with subnational action on climate,” Acadia Center President Daniel Sosland said. “By working together, this region can achieve globally significant carbon reductions while delivering billions of dollars each year for grants and investments to help every community thrive. From rural towns to the region’s biggest cities, TCI can fund investments to make better transportation options more accessible, affordable, and reliable.”
The funding raised through the initiative would be used to fund things like low-carbon transportation programs and investment in clean, equitable transportation solutions. TCI says at least 40% of the region’s greenhouse gas emissions come from the transportation sector.
In 2018, the Connecticut legislature set a goal of reducing greenhouse gas emissions by 45% by the year 2030 from a 2001 benchmark. This initiative would help Connecticut reach that goal.
However, cap-and-invest programs are still controversial in Connecticut and the region despite the success of similar programs like the Regional Greenhouse Gas Initiative, which has invested over $3 billion in auction proceeds to help nine states improve energy efficiency and create green jobs.
But Lamont isn’t the only governor who seems to be hedging on the initiative.
New Hampshire Gov. Chris Sununu pulled his state out of TCI as soon as the initiative was announced on Dec. 17.
“New Hampshire is already taking substantial steps to curb our carbon emissions, and this initiative, if enacted, would institute a new gas tax by up to 17 cents per gallon while only achieving minimal results,” Sununu said in a statement. “This program is a financial boondoggle and the people of New Hampshire will never support it.”
Other organizations from across the region, including the Yankee Institute for Public Policy, wrote an open letter encouraging states to oppose TCI.
“Gas taxes are regressive in nature. The TCI will hurt lower-income and rural residents much more significantly than their higher-income, urban peers,” the open letter explained. “Since motor fuels are economically ‘inelastic,’ the higher costs imposed by the TCI’s fuel tax will have to come out of other areas of household budgets. People already struggling to make ends meet will be forced by their own governments to make painfully difficult choices. Economically speaking, this is bad policy. Morally speaking, it’s just cruel.”
Interested parties are encouraged to offer their input online through Feb. 28, 2020.