Since shale drilling took off around a decade ago, Hurricane Harvey is the largest tropical storm to disrupt the sector. In fact, energy shares are set for the worse month the market has seen since 2015. The destruction of Cheapseapke Energy Corp. (NASDAQ:$CHK) is evident, and production may be slow to bounce back.
Hurricane Harvey took place in Houston, Texas, shutting down a predominant portion of the state’s shale production. The total numbers? A depletion of 15% of U.S. oil supplies. Specifically, Eagle Ford Shale of South Texas saw a complete half of its 1.4 million barrels of daily production.
Now, the entire sector is scrambling to get back on its feet. A handful of companies have indicated that the severity of Harvey is much greater than expected. While a few companies have already began to restart production earlier this week, a strained supply chain poses a tough barrier.
Cheapseake Energy Corp’s shares closed down 3.69% to $3.65. Their response? Stop fracking and halt Eagle Ford shale completely for the week. Representatives from the company admitted that “we anticipate volumes will be restrained until Gulf Coast and Houston refineries are back online.” With that being said, shipping traffic in Houston and other nearby ports are not expected to be restored for another two weeks. This will induce a domino effect on limited production.
Since January 1, Chesapeake’s stock has fallen more than 48%.
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