The rout in U.S. oil and the gas patch is in full swing and cutback announcements are coming fast and furious. The steep descent is now playing out daily and can be extrapolated from the four-month lag chart. Below 1,000 rigs would be my yahoo moment. The lag to production is slower and more problematic, but should show up in the second half of 2015, barring a big oil-price recovery. These are high paying jobs, and energy is a big American industry. Nearly 1.5 million largely good jobs have been created in the shale states since 2010.

source: Bloomberg

April and October are the months that banks traditionally recalculate the value of properties energy companies use as loan collateral. The process is known as the “redetermination of the borrowing base.” Last October, banks were using an $80-a-barrel level for oil in valuing companies’ assets.

After a $5 billion program in 2014, Chevron is ending its stock buybacks entirely. In addition, the company has made large development cutbacks for 2015. Energy stock and credit prices remain too high; but given that buybacks have been a major component of this, the gap should close with shares going lower.

Without question, first-quarter GDP will be severely impacted. U.S. Potemkin Village economic reports are going to get harder and harder to bluff. The long U.S. Dollar trade is extremely overcrowded and is having global effects on large multinational firms, which are also entering crisis mode.

The cabal has several objectives with this by-design oil dump. Until we see it play out, the game is not over. Beside serial defaults in the U.S. shale oil patch, the yahoo moment to watch going forward will be the default of Brazil’s Petrobras, which carries hundreds of billions in debt, including U.S. Dollar debt. The parasite guildists [see “The Parasite Guild“] are swarming around this one, and will handling the debt in captured crony New York state courts.

The second cabal target is Rosneft, which produces 5% of the world’s oil and is 69.5% owned by the Russian state. They have about $20 billion in foreign currency debt to be rolled over in 2015. In addition to the standard cabal parasite guildists, Rosneft is being munched on by the Chinese. Other state-run oil companies in the bulls eye of the guildists include Nigeria and YPF in Argentina.

In summary, the parasite guild is trying to pick up these higher break-even offshore assets or other marginal assets for pennies on the dollar by buying distressed debt (Venezuela, Nigeria, Brazil, Mexico Argentina) and then running the restructuring through their cronies running the New York courts.

The guild also has leverage because of the dollar-based debt that these producers have. So the game is played by getting oil firms in debt (in U.S. dollars), then conducting artificial and manipulated currency and commodity price collapses. The Saudis are puppets of the cabal, and are necessary useful idiots for this operation.