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“The question is, how long do they have that they can get away with this,” said Thomas Watters, an oil and gas credit analyst at Standard & Poor’s in New York. The companies with the lowest credit ratings “are in survival mode,” he said.

The problem for shale drillers is that they’ve consistently spent money faster than they’ve made it, even when oil was $100 a barrel. The companies in the Bloomberg index spent $4.15 for every dollar earned selling oil and gas in the first quarter, up from $2.25 a year earlier, while pushing U.S. oil production to the highest in more than 30 years.

“There’s a liquidity issue, and you start looking at the cash burn,” Watters said.

Distressed Debt

Continental borrows at cheaper rates than many of its smaller peers because its debt is investment grade. S&P assigns speculative, or junk, ratings to 45 out of the 62 companies in the Bloomberg index.

“Our cash flow easily covers interest costs, and we expect to continue maintaining our investment-grade credit rating as commodity prices recover,” said Warren Henry, a spokesman for Oklahoma City-based Continental.

Almost $20 billion in bonds issued by the 62 companies are trading at distressed levels, with yields more than 10 percentage points above U.S. Treasuries, as investors demand much higher rates to compensate for the risk that obligations won’t be repaid, data compiled by Bloomberg show.

“Credit markets have played a big role in keeping the entire sector alive,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd., a consulting firm in London.

So far this year, S&P lowered the outlook or downgraded the credit of almost half of the 105 U.S. exploration and production companies that it rates, according to a May report.

Financial Drain

Companies have reduced spending to cope with lower prices, but those cuts will eventually lead to production declines, further shrinking revenue, Watters said.

West Texas Intermediate, the U.S. benchmark grade, lost 11 cents $60.34 a barrel in electronic trading on the New York Mercantile Exchange at 1:04 p.m. Singapore time on Friday.

U.S. oil production will begin to fall this month and will continue to slide until early 2016 as shale drillers reduce spending, the Energy Information Administration said in a June 9 report.

Interest expense can drain a company’s finances. At this time last year, Quicksilver Resources Inc. was spending more than 20 percent of its revenue on interest. The company missed a debt payment in February and has since filed for bankruptcy. Sabine Oil & Gas LLC missed an interest payment in April and another this month.

Representatives of Fort Worth, Texas-based Quicksilver and Sabine, based in Denver, didn’t return calls or e-mails seeking comment. Sabine shares fell 96 percent in the past year to 8.5 cents, and its bonds are trading for less than 23 cents on the dollar.

Corporate Defaults

Oil and gas companies accounted for one-third of the 36 corporate-debt defaults worldwide this year, and missed interest payments are the leading cause of default, according to a May 14 S&P report. Companies including SandRidge Energy Inc., Breitburn Energy Partners LP and Halcon Resources Corp. have raised cash by taking on new debt or issuing new shares.

The new debt issued by Halcon and SandRidge is secured by oil and gas assets, making it less likely that unsecured bondholders will get repaid in a default. Both companies’ older, unsecured bonds are trading at distressed levels. Halcon’s are going for 72 cents on the dollar or less and SandRidge’s for 62 cents or less, according to data compiled by Bloomberg.

The new borrowing can be expensive. Oklahoma City-based SandRidge issued $1.25 billion of second-lien debt this month at 8.75 percent interest, more than all but one of their existing bonds, records show. The company paid $24 million in fees and will add $109 million a year to interest payments, which are already eating up 29 percent of its revenue.

“It provides us with liquidity we otherwise wouldn’t have had,” said Justin Lewellen, a SandRidge spokesman. “It bought us some significant time.”

SandRidge’s shares fell 84 percent in the last year to $1.08.

The financial troubles of the smaller players become amplified with lower oil prices, Sen said.

“We haven’t seen the worst,” she said.