U.S. shale companies could be forced to write down $300 billion of their assets this year, starting in the second quarter, as operators begin to account for the oil-price collapse on their balance sheets, according to a new study.

The huge impairments—about half the net value of the companies’ property, plant and equipment—would increase the sector’s leverage from 40% to 54%, triggering insolvencies and restructuring, says the study by Deloitte, an accountancy.

“As COVID-19 impacts amplify pressures on shale companies through 2020, a wave of impairments may prompt the deepest consolidation the industry has ever seen over the next six to 12 months,” said Duane Dickson, vice-chairman of Deloitte’s U.S. oil and gas business.

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