Debt Drilling

What is the correct definition of a contango situation in the oil market?

• crude oil prices rise above those further out in the future.

• crude oil prices fall below those further out in the future.

• crude oil prices is below those in the past.

• crude oil prices is above those in the past.

Lending frictions, at renegotiation, play an important role in accelerating well completion for high-leverage firms

• Yes

• No

Tick the correct statement!

• An increase in collateral leads to a reduction in firm investment

• Early well completion is highly unlikely to yield high-leverage firms a better cash position

• Disregarding covenants leads to increase in firm investment

• ABL renegotiations are pre-scheduled 3 months in advance

The authors find that wells completed by high-leverage firms prior to credit renegotiations have higher initial production volume than wells completed after renegotiation

• True

• False

Whats the price in USD for one Barrel of WTI Oil?

• 76

• 128

• 345

• 422

By how many months did the firms delay their investment decisions?

• 1 month

• 2 months

• 3 months

• 6 months

How many firms are in the data sample?

• 59

• 45

• 13

• 69

What is the main finding of the paper?

• High-leverage firms delay well completion by 2 months

• Low-leverage firms accelerate completion by 1 month

• High-leverage firms accelerate completion by 1 month

• Low-leverage firms delay completion by 2 month

Which type of wells do high-leverage firms prefer to accelerate?

• Multi-well-leases

• Single-well-leases