Posted on 05/08/2022 12:10:56 PM PDT by Hojczyk
Much of the U.S. shale industry recently reported higher profits than in the same quarter a year earlier, but companies aren’t reinvesting more in production—indeed, some have let U.S. output slip as they focus on paying investors. Nine of the largest U.S. oil producers this week said they shelled out a combined $9.4 billion to shareholders via dividends and share repurchases in the first quarter, about 54% more than they invested in new oil developments.
Limited spending, supply-chain constraints and harsh winter weather in some regions, analysts said, took a toll on shale production, which has increased only modestly so far this year. Some producers, including
That some of the largest shale companies allowed production to slip amid the highest oil prices in years shows the extent to which the industry has adopted restraints on spending and made substantial growth in domestic output far less feasible than it was the last time oil prices topped $100 a barrel.
Even as Biden administration officials have urged shale executives to pump more to help ease high gasoline prices, most reporting earnings this past week said they wouldn’t alter spending plans in pursuit of growth, touting low rates of reinvestment in oil and dividend yields higher than most in the S&P 500 index. Marathon said it will spend about 8% more this year due to inflation if oil prices stay elevated, but indicated that is only a function of the current market environment.
“We are not adding any growth capital due to higher prices,” Marathon Chief Executive
(Excerpt) Read more at techilive.in ...
Production is falling because there is no new money from the capital markets to drill. Wall Street is closed to oil companies.
Any growth has to be reinvestment from money made at the well head.
This is much slower.
Why would oilcos reinvest profits for new production? They are facing being levered out of the market altogether by a government that promises to shut them down in a few short years.
++++=
You have it exactly.
With Biden as President the regulatory future is, at best, uncertain. Why spend big bucks on equipment that can be idled by the wave of a hand in Washington DC.
Why invest when the green stalinists can shut you down tomorrow?
“””That some of the largest shale companies allowed production to slip amid the highest oil prices in years shows the extent to which the industry has adopted restraints”””
Too many folks think that the oil companies only have to open a spigot to increase oil production.
The folks at TechLive need to do some research before making these false claims.
Two years ago oil prices dropped to ten bucks a barrel and many of the drillers went bankrupt.
It takes time to regroup and start drilling again.
And drilling the well is the easy part, then comes the oil well completion process.
Owen, an excellent analyis
Quietly up the pumping. Make no announcements regarding the volume of production. Pretend the market is still tight, and enrich your stockholders at the shortage oriented pricing.
Quietly up the pumping. Make no announcements regarding the volume of production. Pretend the market is still tight, and enrich your stockholders at the shortage oriented pricing.
oops
ESG and SRI are severely curtailing capital for Fossil Fuels. “Progressives “ consider these as under rated Climate Change Solutions.
[Moral of the story, time has passed, the formation doesn’t have infinite oil, so don’t think failure to increase production is all that voluntary.]
IIRC, $500b was lost from peak to trough in the last bust, during which spot oil went negative. Bond and equity holders were bled white and numerous companies simply folded. To put things in perspective, BP’s market cap today is 1/2 what it was at its peak 12 years ago. Meanwhile, the S&P 500 is 4x what it was. Another way to put this? If you invested $1,000 in the S&P 500 then, you have $4,000 today. Whereas a $1,000 in BP then would have you looking at $500 today, for a $500 loss. The idea that oil companies are raking in the cash is risible. All they’re doing is repairing the damage to their balance sheets from a hostile regulatory environment, whether kleptocratic foreign governments and pressure groups or relentlessly predatory domestic regulators and lawmakers.
Ya want Biden/Harris gone? It's gonna cost ya.
“Quietly up the pumping.”
All wells are wide open in the USA.
Wells have a decline curve that is quite sharp. The “flush production” on a new drill lasts a matter of months, a year or so on a great well.
To increase production in any meaningful way requires continuous drilling. The money for that kind of capital expenditure is not available.
In fact, Wells Fargo today announced is will greatly restrict lending for drilling.
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