Next wave of energy bankruptcies begins now

Second-quarter earnings aren't out yet, but they will be ugly... and few of the shale gas producers will escape Two months ago, I told my readers to expect a wave of bankruptcies in the energy sector. The situation was dire. Companies producing natural gas in America's shale fields were already suffering from record-low natural gas prices. And one of their alternate sources of revenue was under threat. Things have gotten much worse since then. I expect to see some energy producers go under by the end of the year. Shareholders will be devastated. Let me explain... As natural gas prices fell in 2011, producers began to rely more and more on something called "natural gas liquids." Natural gas liquids (NGLs) are hydrocarbons like butane, ethane, and gasoline. (These liquids are refined into hundreds of products you use every day – like plastics and propane.) Traditionally, these are priced more like crude oil than like natural gas... which means that over the last 18 months, companies could earn a lot more money selling NGLs than they could selling so-called "dry gas." Continue reading this article

.