“New and unforeseen headwinds continue to jolt the industry’s progress,” authors Duane Dickson, Kate Hardin and Anshu Mittal said in the report. “Although the sub-zero price was a temporary dislocation, this intense volatility highlights the fragile state of the industry.”

Shale was just getting on a more solid footing and learning to live with $50 a barrel oil before the Covid-19 pandemic ripped through global crude demand causing prices to plunge. Now, shale producers may be forced to write down their assets by $300 billion this year, Deloitte said. That’s equivalent to the entire market value of Chevron Corp. and Royal Dutch Shell Plc, the world’s No. 2 and 3 major oil companies.

While the writedowns are non-cash items, they reduce the value of a company’s equity and increase their debt-to-equity ratios, a key measure of indebtedness used by lenders. The shale industry’s leverage ratio would increase to 54% from 40% with the writedowns.

That “can trigger many negative sequences of events, including bankruptcy,” Deloitte said.

Shale producers’ financial problems stem from a decade’s worth of huge production growth using new fracking technologies funded by massive borrowing and financing from Wall Street.

The production boom propelled the U.S. to become the world’s largest producer of both oil and gas. But in doing so, companies burned through some $342 billion of cash since 2010, leaving little in the way of returns for investors.

Chisholm Oil & Gas and Extraction Oil & Gas Inc. filed for bankruptcy protection last week, joining others including Whiting Petroleum Corp. and Ultra Petroleum Corp. Meanwhile, Chesapeake Energy Corp. and California Resources Corp. have warned investors they’re at risk of failing to meet debt obligations.

Technical insolvency means a company’s discounted future value at a certain oil price is lower than their net liabilities. Whether or not a company actually files for Chapter 11 bankruptcy depends on breathing room and new credit provided by lenders.