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Despite Capex Cuts, Appalachian Frackers Report Negative Free Cash Flow in Second Quarter 2020

September 01, 2020
Kathy Hipple and Clark Williams-Derry and Tom Sanzillo
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Key Findings

Even after cutting capital expenditures to their lowest quarterly point in more than six years, nine Appalachian shale-focused gas producers continued to hemorrhage money, reporting more $134 million negative free cash flows in the second quarter of 2020. Together, they have spilled $1.1 billion in red ink over the past twelve months.

Executive Summary

Key Findings:

  • Nine fracking-focused gas companies in Appalachia reported $134 million negative free cash flow in Q2 2020.
  • Over the past 12 months, these companies generated $1.1 billion negative free cash flow.
  • In aggregate, capital spending was $1.9 billion in the quarter, a 35% year on-year drop.
  • Capital investments during the quarter were the lowest in at least six years.

Kathy Hipple

Former IEEFA Financial Analyst Kathy Hipple is a founding partner of Noosphere Marketing and the finance professor at Bard’s MBA for Sustainability. She worked for 10 years with international institutional clients at Merrill Lynch and then served as CEO of Ambassador Media.

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Clark Williams-Derry

Clark Williams-Derry focuses on the finances North America’s oil, gas, and coal industries. His areas of expertise include: the long-term financial performance of North American oil & gas companies, particularly fracking-focused enterprises; company- and basin-specific studies of oil and gas production; U.S. LNG exports in the context of global markets; and U.S. and Canadian coal export projects.

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Tom Sanzillo

Tom Sanzillo is Director of Financial Analysis for IEEFA. He has produced influential studies on the oil, gas, petrochemical and coal sectors in the U.S. and internationally, including company and credit analyses, facility development, oil and gas reserves, stock and commodity market analysis, and public and private financial structures. He also examines such areas as community and shareholder activism, institutional investment, public subsidies and Puerto Rico’s energy economics.

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