Even before the price of oil collapsed in 2014, the US shale oil industry was widely criticized for its poor economics. Because production from shale wells starts to decline rapidly almost as soon as the well is complete, operators have no choice but to continually reinvest all available free cash flow into developing new prospects to maintain and grow production.
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When the price of oil first crashed below $50 per barrel, this business model failed to hold up, and many smaller producers went out of business. Those that have managed to stay alive, still face similar challenges.
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