Quote: "These companies are plugging cash shortfalls with junk-rated debt (190 Billion). This thing is absolutely going to blow sky-high..."

From NewsWeek Article: 

Drillers Piling Up More Debt Than Oil Hunting Fortunes in Shale

Wilson once told investors that the acreage might contain the equivalent of 1.2 billion barrels of oil. He fixes his interlocutor with a blue-eyed stare and leans forward. At 67, he bench-presses 250 pounds (110 kilograms) and looks it. Outside the expansive windows of his 67th-floor executive suite, downtown Houston steams in its July smog.

He responds, unsmiling, with a one-syllable obscenity: “F---.”

Wilson has reason to curse, Bloomberg Markets magazine will report in its October issue. On the wall behind him hang framed stock certificates of the four public energy companies he’s built in his 44-year career. The third, Petrohawk Energy Corp., discovered the Eagle Ford shale, now the second-most-prolific oil formation in the country. He sold Petrohawk three years ago for $15.1 billion.

Then came Halcon. Since Wilson took over as chairman and chief executive officer in February 2012, the company’s shares have dropped by about half, trading at $5.67 on Sept. 5.

Halcon spent $3.40 for every dollar it earned from operations in the 12 months through June 30. That’s more than all but six of the 60 U.S.-listed companies in the Bloomberg Intelligence North America Independent E&P Valuation Peers index. The company lost $1.4 billion in those 12 months. Halcon’s debt was almost $3.2 billion as of Sept. 5, or $23 for every barrel of proved reserves, more than any of its competitors.

Wilson’s biggest gamble is on 315,000 acres (127,000 hectares) of unproven Tuscaloosa Marine Shale, known as the TMS, a layer of rock stretching from Louisiana’s western border to southwestern Mississippi.

“It has to work for them,” says Leo Mariani, a senior analyst at RBC Capital Markets LLC in Austin, Texas. “If the acreage doesn’t work out and they can’t get the costs down, they’re going to be in big trouble.”

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