ESG Telegraph
  • Home
  • Latest News
  • Environment
  • Companies
  • Investors
  • Governance
  • Markets
  • Social
  • Regulators
  • Sustainable Finance
Featured Posts
    • Companies
    Bayern Munich targets US fans to close financial gap with Premier League
    • August 9, 2022
    • Markets
    Sweden’s junior market becomes Europe’s hottest for growth stocks
    • August 9, 2022
    • Latest News
    Tibetan cities locked down over first Covid outbreak in two years
    • August 9, 2022
    • Companies
    London’s ‘magic circle’ law firms make renewed bid to crack US
    • August 9, 2022
    • Markets
    Fed help isn’t coming | Financial Times
    • August 9, 2022
Featured Categories
Belarussia
View Posts
Companies
View Posts
Energy
View Posts
Environment
View Posts
Food
View Posts
Governance
View Posts
Health
View Posts
Investors
View Posts
Latest News
View Posts
Markets
View Posts
Potash
View Posts
Regulators
View Posts
Russsia
View Posts
Social
View Posts
Supply Chain
View Posts
Sustainable Finance
View Posts
Technology
View Posts
Uncategorized
View Posts
ESG Telegraph ESG Telegraph
7K
9K
4K
1K
ESG Telegraph ESG Telegraph
  • Home
  • Latest News
  • Environment
  • Companies
  • Investors
  • Governance
  • Markets
  • Social
  • Regulators
  • Sustainable Finance
  • Markets

US shale producers: high oil prices not capex produce cash gushers

  • February 8, 2022
  • Staff
Total
0
Shares
0
0
0

US shale oil producers spent much of last year holding back on new supply despite a 54 per cent rally in crude prices. The restraint was understandable. The onset of the coronavirus pandemic in 2020 crushed demand for oil and share prices of drillers big and small suffered. To win back investors listed drillers focused on strengthening their balance sheets and boosting shareholder returns.

That discipline is now being put to the test. West Texas Intermediate, the US benchmark, topped $90 a barrel for the first time since 2014 last week. With the price needed to break even on a new well in the Permian at about $43 to $56 a barrel (and much less for existing wells), there is more temptation to chase greater cash flow by increasing output. Even the largest explorers, such as ExxonMobil and Chevron, last week pointed to the production growth to come from their acreage in the southwestern Permian shale region.

Most producers can afford to drill and keep investors happy with higher payouts. Cash from operations from 21 publicly listed shale drillers stood at about $13bn, in the third quarter of 2021, according to consultancy Rystad Energy. That approaches record levels. However, this group spent only $5.9bn in capital expenditure during the period. That is less than a quarter of their levels at the height of the boom. For the nine months, the free cash flow looks the highest since at least 2013.

Shale producers account for about 70 per cent of US oil output. The latter, at about 11.5mn barrels a day, lies well below the 13mn b/d high reached in early 2020. Much of that gap should close in the next year or so on current prices, says Rystad.

The danger comes if shale producers increase output too quickly. But drillers look unlikely to return to the days of 30 per cent annual production growth. Rising labour costs and the risk of Opec retaliating, given its sufficient spare capacity, should balance any runaway optimism.

Energy stocks were the best performers on the S&P 500 in January. They remain a good bet if higher oil prices help deliver healthy payouts to shareholders.

Total
0
Shares
Share 0
Tweet 0
Pin it 0
You May Also Like
Read More
  • Markets

Sweden’s junior market becomes Europe’s hottest for growth stocks

  • Staff
  • August 9, 2022
Read More
  • Markets

Fed help isn’t coming | Financial Times

  • Staff
  • August 9, 2022
Read More
  • Markets

Smaller fintechs are still hiring up despite economic downturn

  • Staff
  • August 8, 2022
Read More
  • Markets

BHP/Oz Minerals: bolt-on buy would have a copper-bottomed rationale

  • Staff
  • August 8, 2022
Read More
  • Markets

Coinbase: BlackRock deal will not put crypto platform in the black 

  • Staff
  • August 8, 2022
Read More
  • Markets

Kirin gets tangled in the divestment debate

  • Staff
  • August 8, 2022
Read More
  • Markets

World’s largest shipbroker lifted by surge in oil production activity

  • Staff
  • August 8, 2022
Read More
  • Markets

Energy companies urge UK to detoxify gas exports to EU

  • Staff
  • August 8, 2022

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Featured Posts
  • 1
    Bayern Munich targets US fans to close financial gap with Premier League
    • August 9, 2022
  • 2
    Sweden’s junior market becomes Europe’s hottest for growth stocks
    • August 9, 2022
  • 3
    Tibetan cities locked down over first Covid outbreak in two years
    • August 9, 2022
  • 4
    London’s ‘magic circle’ law firms make renewed bid to crack US
    • August 9, 2022
  • 5
    Fed help isn’t coming | Financial Times
    • August 9, 2022
Recent Posts
  • News Corp profits almost double as subscriptions drive post-pandemic recovery
    • August 9, 2022
  • FirstFT: Rishi Sunak promises to ease cost of living crisis
    • August 9, 2022
  • Investors divided over how long Big Tech rally will last
    • August 9, 2022

Sign Up for Our Newsletters

Subscribe now to our newsletter

ESG Telegraph
  • Home
  • Privacy Policy
  • Guest Post
  • Contact

Input your search keywords and press Enter.