As we’ve frequently chronicled, 2022 was a golden year for U.S. exploration and production (E&P) companies and their investors, as soaring commodity prices triggered record cash generation to fund the highest levels of shareholder returns of any American industry. But Camelot didn’t last forever, and the twin impacts of lower hydrocarbon prices and rising inflation inevitably eroded cash flows in 2023. The good news is that these fiscally disciplined producers still recorded the second-best results of the last decade to fund historically strong shareholder returns. In today’s RBN blog, we detail the 2023 cash allocation of the 41 major U.S. E&Ps that we cover.
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As we recently reviewed in our blog on 2023 earnings, Good Enough, realized prices for the 41 E&Ps declined by one-third last year but cash flows from operating activities (CFOA; far-left column group in Figure 1 below) declined by just 20.4% to $117.9 billion (light blue columns). Largely driven by strong post-pandemic inflation, capital expenditures grew 24% to $72.3 billion. Lower inflows and higher investment squeezed free cash flow (FCF; not shown in graph) by about 50% to $45.6 billion. Understandably, producers were unable to sustain the record shareholder returns of 2022, so stock repurchases and dividends were reduced by 43% and 25%, respectively, to $15.3 billion and $22.5 billion. Nevertheless, dividends and share repurchases were significantly higher than any year prior to 2022. Dividends were still twice the amount and share repurchases were nearly three times the level posted in 2021.
Figure 1. E&P Cash Allocation, 2019-23. Source: Oil & Gas Financial Analytics, LLC
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About the song
“If You’ve Got the Money Honey (I’ve Got the Time)” was written by Lefty Frizzell and Jim Beck. It appears as the second song on side one of Willie Nelson’s 19th studio album, The Sound in Your Mind. Lefty Frizzell’s original recording of the song took place at his manager and co-writer Jim Beck's Studio in Dallas, TX. It was released as a single in September 1950 and went to #1 on the Most Played C&W Jukebox Records and #2 on the C&W Best Seller Singles charts. The song would appear as the first song on side one of Lefty Frizzell's second studio album, Listen to Lefty. Released in June 1952, the album was compiled of singles previously released by Frizzell. Personnel on Frizzell's record were: Lefty Frizell (vocals), Norman Stevens (lead guitar), Bobby Williams (rhythm guitar), Jimmie Curtis (steel guitar), Pee Wee Stewart (fiddle), and Madge Sutee (piano). Willie Nelson released his version as a single in February 1976 and it went to #1 on the Billboard Hot Country Songs Singles chart. Personnel on Nelson's record were; Willie Nelson (lead vocal, acoustic guitar), Bobbie Nelson (piano), Bee Spears (bass), Jody Payne (electric guitar), Mickey Raphael (harmonica), and Paul English, Rex Ludwick (drums).
Nelson’s album, The Sound in Your Mind, was recorded at Autumn Sound Studios in Garland, TX, and produced by Willie Nelson. It was Nelson’s second album for Columbia Records. Released in February 1976, it went to #1 on the Billboard Top Country and #48 on the Billboard 200 Albums charts. Two singles were released from the LP.
Willie Nelson is an American country music singer, songwriter, guitarist and actor. One of the founding figures of the “outlaw country” movement in the seventies, Nelson is one of the most popular and recognized figures in country music. He has released 100 studio albums, 14 live albums, 51 compilation albums, two soundtrack albums, and 130 singles. He has appeared in 57 motion pictures and television shows. He is a member of the Country Music Hall of Fame, Rock and Roll Hall of Fame, and the National Agricultural Hall of Fame. He is the recipient of Kennedy Center Honors and the Gershwin Prize from the Library of Congress. Nelson continues to record and tour and is currently on tour in the U.S.
