October 18, 2023 – OilPrice
The Next Phase Of The U.S. Shale Revolution
By David Messler
One of the key problems inherent in this effort has been the shift producers have made in reallocating cash flow from new drilling to shareholder returns. These returns have been very popular with investors but have come at a price for reserves replacement even as Finding and Development-F&D costs for a broad cohort of shale E&Ps, have declined as the blue bars in the RBN Energy graph reveal. The sharp bump higher in RR from 2020-2021 came in part from companies reappraising reserves that had been previously written down in the oil price collapse. Once this was complete, we see the line flattening into 2022 as new drilling shoulders the burden for many operators.
One of the things that comes into focus is how some companies have done a better job than others at RR. We can start with Pioneer Natural Resources (NYSE:PXD), a company soon to be merged into ExxonMobil (NYSE:XOM). There are many reasons why XOM was determined to pay up for PXD, and we discussed some of them in an OilPrice article last April. There are other reasons, and we plan to detail them in a future article. That said, PXD’s success in replacing its reserves can’t have escaped XOM’s careful eye, at better than 300% over the three-year period, as this RBN Energy graphic notes.
Read the full article here: https://oilprice.com/Energy/Crude-Oil/The-Next-Phase-Of-The-US-Shale-Revolution.html
