There’s been a lot of talk over the last year or so about U.S. E&Ps exerting financial discipline by moderating their investments in growth, paying down debt and returning substantial portions of their free cash flow to investors in the form of dividends and stock buybacks. So, worries in the broader economy that the banking crisis and the specter of a looming recession may restrict access to capital markets shouldn’t be a major concern for the 41 oil and gas producers we monitor, right? As we discuss in today’s RBN blog, the answer isn’t a simple yes or no. The bad news is that the E&P sector still holds quite a bit of debt and that several of the companies we track added to their debt load in 2022. The good news is that total debt levels are down and that the net present value (NPV) of oil and gas reserves — a key factor in determining how much debt an E&P can handle — has soared, which may make it easier for them to borrow money if they need it.
Join us at our historic 20th School of Energy!
School of Energy: Foundations is a two day, in person conference designed to help energy professionals better understand the forces shaping crude oil, natural gas, NGLs, refined products, and petrochemicals.
Attendees will learn from RBN experts, work with Excel based analytical models, participate in Q&As, and network with industry peers.
Build the foundation to better navigate volatile energy markets.
In our recent blog on E&P capital allocation, Spread It Around, we pointed out that the oil and gas industry historically outspent cash flow in the decade leading up to the 2020 pandemic. As shown in Figure 1 below, that piled on debt — the E&Ps we follow averaged a collective $140 billion-plus of debt in the 2014-18 period and their debt spiked to $167 billion in 2019 (blue bars and left axis), or about $3.50 of debt per barrel of oil equivalent proved reserves (boe; orange line and right axis). That boosted the sector-wide debt-to-capital ratio to more than 35% four years ago. (The debt-to-capital ratio is determined — you guessed it — by dividing a company’s total debt by its total capital, the latter of which is the sum of its total debt and its total shareholder equity.)
Join Backstage Pass to Read Full Article
About the song
“The Debt I Owe” by was written from a text by Woody Guthrie and music by Lou Reed. The song appears as the fourth tune on the album, Note of Hope: A Celebration of Woody Guthrie. Reed added his own closing line to the song, “I wish this debt was not about money.” Woody’s daughter and director of the Woody Guthrie Foundation, Nora Guthrie, remarked that Reed’s closing line “rammed the doors open for me, to his soul.” Personnel on the record were: Lou Reed (vocal, guitar), and Rob Wasserman (bass).
Note of Hope: A Celebration of Woody Guthrie was put together by Nora Guthrie and producer/bassist Rob Wasserman. The album utilizes Woody Guthrie’s writings set to music by artists Lou Reed, Jackson Browne, Van Dyke Parks, Ani DiFranco, and others. It was released on Savoy Records in July 2011.
Woody Guthrie was an American singer-songwriter who was one of the dominant figures in American folk music. His work focused on American socialism and anti-fascism. His influence is heard in the works of Bob Dylan, Pete Seeger, Johnny Cash, Ramblin’ Jack Elliott, Bruce Springsteen, and Guthrie’s son, Arlo. He wrote hundreds of songs, with his most well-known one being the American standard, “This Land is Your Land.” He is the recipient of a Grammy Lifetime Achievement Award and is a member of the Rock and Roll Hall of Fame. His archives are housed at the Woody Guthrie Center in Tulsa. Guthrie died of Huntington’s Disease in New York City in October 1967 at the age of 55.
Lou Reed was an American musician, songwriter, and poet. He released four albums as a member of The Velvet Underground, and 22 studio albums, 15 live albums, 16 compilation albums and 46 singles as a solo artist. He is a member of the Rock and Roll Hall of Fame as a member of The Velvet Underground and as a solo artist. Reed died in Freeport, NY, in October 2017 at the age of 71.
