A pump jack operates April 24 just outside of Midland.

Almost a third of U.S. shale producers are technically insolvent with crude at $35 a barrel, according to a report, highlighting the industry’s acute financial strain even as oil prices rebound from a record low earlier this year.

A recent rebound in price will do little to prevent 15 years of debt-fueled production growth catching up with producers, Deloitte, a multinational professional services network, said in a study. Technical insolvency is an accounting way of saying a company will face problems meeting debt repayments.

“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 and Royal Dutch Shell, 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.