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Shale Drillers Face Record Cost Pressures as Banks Shun Sector

  • Dallas Fed’s quarterly survey cites oilfield supply snarls
  • Lenders avoiding fossil-fuel business amid ‘political risk’

Oil drillers in the biggest U.S. fields are shouldering record costs at the same time that some banks are increasingly reluctant to loan money to the sector, according to the Federal Reserve Bank of Dallas.   

Equipment, leasing and other input costs for oil explorers and the contractors they hire surged to an all-time high during the current quarter, the Dallas Fed said in a report released on Wednesday. Drillers also are seeing the universe of willing lenders shrink in the Eleventh Federal Reserve District that includes Texas and parts of Louisiana and New Mexico.