Helping America Navigate a New Energy Reality

The big bust in the oil fields

By on 25 Mar 2016 in news, notable posts

Unfortunate circumstances and miscalculation in Texas have forced energy firms to retreat amid a sea of defaults.

(Washington Post) Tilden, Tex. — He’d borrowed from banks and investors and retirement funds, all in a frenzied mission to drill for oil and gas, and by the time Terry Swift realized he’d gone too far, this was his debt: $1.349 billion.

His company, founded by his father almost 40 years earlier, had plunged into bankruptcy and laid off 25 percent of its staff. Its shares had been pulled from the New York Stock Exchange. And now Swift was in a company Chevrolet Tahoe, driving back to the flat and dusty place where his bets had gone bust.

Swift was coming to this energy-rich strip of South Texas trying to grapple with how much blame he shouldered for the failure of his company. A low-key and historically cautious oil chief executive who eschews private jets and orders low-fat salads for lunch, he had made what he thought was the best financial move of the past decade — a gamble on rising oil prices — and yet was ensnared in an industry-wide craze of dangerous debt.

“Maybe we were wrong to believe there wouldn’t be a bust this bad,” Swift, 60, said, as the Tahoe rumbled south of San Antonio. “It didn’t even feel risky.”

Swift’s miscalculation has made his company, Swift Energy, a casualty of the greatest wave of financial defaults since America’s subprime mortgage crisis ravaged the U.S. economy. For him, it’s a painful low point in his family’s 111-year journey in American oil, one that started when his great-grandfather set up a series of storage tanks in the plains outside of Tulsa. And it’s a jarring reversal from just a few years ago, when Swift felt as if he’d taken his company to a pinnacle by capitalizing on a massive surge in U.S. energy production — one that promised an era of American energy independence thanks to revolutionary new technologies.

[ Graphic: The end of the U.S. oil boom, told through one Texas firm’s bust ]

This new wave of bad loans isn’t the same magnitude […]

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