Why did Eike Batista lose $34.5 billion dollars? Well simply put, there’s wasn’t as much oil in the ground as he thought and it was harder to access than he thought and then he wouldn’t admit that it was harder to get out of the ground and still remained arrogant about how much money he was going to make. And then Brazil’s economy slowed a bit and he’d also borrowed a ton of money to pay for all the new wells:
An eight-month study, says this person, showed the wells were basically duds. With that knowledge, OGX would announce it was abandoning a group of fields, turning back some of those expensive leases to the government. The well that started at 15,000 barrels a day would be shut in 2014. If OGX fails to pay off its $3.6 billion in bonds it would be among the largest corporate defaults in history.
“It’s stunning. There’s a maxim: Never drill with debt,” says Michael Roche, an emerging-market strategist at broker-dealer Seaport Group. “I’m sure the bond managers who suffered the most losses say ‘I’m never again going to lend to an oil company that’s not producing oil.” Bloomberg