Rego ................... it goes way deeper than just interest rates for the shale industry, basically the oil industry must report their reserves annually (US financial year is the calendar year) and the SEC sets the rate per BOO based on the average price over the previous 12month period (price is taken on the 1st of each month).
The total reserves reported last year (based on the average cost over 2013) was so high it enabled the shale industry to leverage their borrowings on the reserves HOWEVER this year, because the average cost PBOO has crashed ~60%, the shale companies will not have the assets to leverage the borrowing against so will effectively be insolvent!!!
It has been estimated that ~25% of shale operations will be closed down with, most probably, the better assets being pick over by the majors.
As I stated earlier, its interesting times we live in!!!!
HKP
Rego ................... it goes way deeper than just interest...
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