North American shale producers far outspent their revenue in the second quarter despite making deep spending cuts to survive the worst oil price crash in decades.

Operators idled rigs, sacked workers and even stopped producing oil as the coronavirus pandemic hit global energy demand and sent U.S. crude prices below zero in April—but it was all “too little, too late,” analysts at the Institute for Energy Economics and Financial Analysis (IEEFA) said Sept. 15.

The 34 shale oil and gas producers in the IEEFA study spent $3.3 billion more on drilling and other projects during the second quarter than they earned by selling oil and gas, the sector’s worst performance in years, the institute said in a report.

“In financial terms, companies in the center of the U.S. fracking boom have been performing terribly for years,” said Clark Williams-Derry, the report’s lead author. “But last quarter was particularly dismal, characterised by low prices, falling revenues, collapsing investment and declining investor sentiment.”

Revenue across the group fell 64% compared with the previous quarter, the IEEFA said, as plunging prices took their toll. In response, companies slashed capex by an average of 45%.

EOG Resources Inc., one of the shale patch’s biggest oil producers, cut its capex by 70% but still spent $360 million more than it generated during the second quarter, the IEEFA said. Continental Resources Inc. spent $334 million more than it generated.

The brutal second-quarter results marked a new nadir for an industry now notorious among investors for its poor returns. Oil and gas has been the S&P 500’s worst-performing sector since 2010 and has lost 46% of its value since the start of 2020, compared with a near-5% rise for the main board.

The poor financial performance contrasted in recent years with the sector’s startling success in its “upstream” business, where shale drillers ended decades of declining US oil and gas output, making the country the world’s largest producer.

But the price crash has also ruined that achievement. U.S. oil output, which hit a record high near 13 million bbl/d early this year, was less than 11 million bbl/d in July, according to the federal Energy Information Administration.

Oil sector job losses have exceeded 100,000, according to consultancy Rystad Energy, as activity has stalled. The number of operating rigs in the U.S. on Sept. 14 was about 70% below its level a year ago, according to Enverus, a data provider.

Haynes and Boone, a law firm that tracks oil-patch bankruptcies, said 36 producers had gone bust since the start of the year, leaving $50bn worth of debt behind, and the pace of filings had “substantially picked up.”

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