Billions in impairments, spending cuts expected in oil earnings


HOUSTON — A $32 billion operating cash shortfall and persistent low oil prices will probably force big shale drillers to announce billions in oil field impairments and spending cuts in third-quarter earnings reports this week.

“It should be a weaker quarter,” said Guy Baber, an analyst at Simmons & Company International in Houston. “Third quarter prices were the worst of the year, down 20 percent from the second quarter. It was a pretty significant fall.”

Barclays said it expects a handful of large North American oil producers including Chesapeake Energy Corp. and Apache Corp. to report in the next few weeks that they wrote off a combined $20.9 billion in oil property values in the third quarter.

That’s on top of the $40 billion in impairments the six producers, also including Devon Energy, Southwestern Energy Co., Encana Corp. and Newfield Exploration Co., posted in the first half of the year. (by Colin Eaton,