September 21, 2020 Read More →

Upstream industry focuses on cutting losses instead of growth

Argus Media:

US crude output may never recover from Covid-19 as the upstream industry focuses on stemming cash flow losses rather than growth.

“We see the rest of our peers, the private companies and even the major integrated companies all shifting to a more disciplined mode going forward,” independent producer EOG’s chief executive Bill Thomas says. “And certainly, we do not think we will ever really get back to the 12.8mn b/d before the pandemic.”

Cash flow was never a priority for US shale producers in the past. “While fracking has led to a boom in US oil and gas output, it has consistently burned through more cash than it has produced,” the Institute for Energy Economics and Financial Analysis (IEEFA) says. Companies collectively “racked up negative cash flows in every single year from 2010 to 2019”, an IEEFA study* of 34 North American oil and gas producers shows. Producers still spent $3.3bn more than they made from sales as oil prices plunged in the second quarter, despite cutting capital spending by 45pc year on year (see graph).

[David Long]

More: US shale producers face cash constraint

Posted in: IEEFA In the News

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