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Shale producers spilled $2.1 billion in red ink last year

March 05, 2020
Clark Williams-Derry and Kathy Hipple and Tom Sanzillo
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Key Findings

A cross-section of North American fracking-focused oil and gas companies reported $2.1 billion in negative free cash flow in 2019.

Over the decade, these companies reported negative free cash flows every year, totaling $189 billion.

Disappointing cash flows have soured investors on the sector, constraining the oil and gas industry’s ability to tap debt and equity markets.

Executive Summary

A cross-section of 34 North American shale-focused oil and gas producers spent $189 billion more on drilling and other capital expenses over the past decade than they generated by selling oil and gas, an IEEFA analysis finds. These results included a disappointing $2.1 billion in negative free cash flows in 2019.

This dismal financial performance came despite rapid growth in North American production of both oil and gas. The shale revolution has propelled the U.S. into becoming the world’s most prolific oil producer. Yet in financial terms, this production boom has been an unrelenting financial bust.

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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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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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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