A presentation Saturday about the fracking industry and its financial outlook drew dozens to the Butler Public Library. The event was hosted by Marcellus Outreach Butler, and the discussion included the recent bankruptcy filing of Rex Energy.

Dozens of concerned citizens gathered recently at the Butler Public Library to hear a presentation regarding the financial threat to the fracking industry.

The presentation was made by John Detwiler of Pittsburgh and was hosted by Marcellus Outreach Butler, discussing the “precarious finances of the fracking industry” and the challenges the industry faces.

Detwiler, a registered professional engineer and a former faculty member at Carnegie Mellon University, has worked as a business executive and a strategic consultant across a wide range of industries, including natural gas and electric power, as well as health care, banking, and local government, according to Marcellus Outreach Butler.

His presentation Saturday follows Rex Energy's recent bankruptcy filing, with plans to begin selling off its remaining assets over the next few months.

In filings to the Securities & Exchange Commission, the oil and gas company said it would file for Chapter 11 protection after it defaulted on a debt payment in April as well as the company's failure to “timely deliver” financial statements to lenders and the company's “inadvertent” failures to provide lenders with accurate notices of the company's financial troubles. Rex is headquartered in State College with leases and shale wells throughout Butler County. Founded in 2007, it has offices in Cranberry Township, with more than 75 percent of its gas well permits issued by the Pennsylvania Department of Environmental Protection in Butler County.

In Western Pennsylvania, Rex Energy's bankruptcy filing has drawn new attention to the precarious finances of the fracking industry, according to Marcellus Outreach Butler. Detwiler spoke about the hundreds of billions of dollars that investors will never recover, what keeps this industry going despite those staggering losses, and “what happens when the music finally stops.”

Detwiler said the industry's “insatiable” need for capital is one driving businesses to the brink.

“Each well, each mile of pipeline requires millions of dollars,” he said.

Because of this, he said the companies in the industry continue to “double down” on capital expenses, such as drilling wells and acquiring acreage to construct those wells, using borrowed money, while investors have begun to “lose patience” with companies showing that well output has been steadily decreasing, and failing to turn a profit, he said.

“The bloom is off the rose,” Detwiler said. “The financial machine is starting to sputter.”

Haynes and Boone LLP, a national law firm with more than 600 lawyers that include nearly 30 restructuring practitioners, stated in its Oil Patch Bankruptcy report of March 31, that it has tracked 144 North American oil and gas producers that have filed for bankruptcy since the beginning of 2015, involving about $90.2 billion in cumulative secured and unsecured debt. In 2018, with what is considered an improved oil and gas climate over the previous years, they have tracked six producers that have filed bankruptcy as of March 31, representing about $7.5 billion in cumulative secured and unsecured debt, according to a news release from Marcellus Outreach Butler.

Detwiler said the “industry may be unable to adapt to these constraints” potentially leading to the failure of the fracking industry.

A spokesman for the Marcellus Shale Coalition did not return repeated calls from the Butler Eagle regarding the industry's take on Detwiler's claims.