June 23, 2021 – Forbes
Oilfield Service Firms Still Waiting To See Benefits Of Higher Prices
By: Dan Eberhart
This explains why producers are swimming in free cash flow: they are reaping fat revenues from strong oil prices while keeping capital spending low. Producers have to do this to get back in the good graces of investors, who grew tired of the shale sector’s previous debt-fueled business model that saw it wildly outspend its cash flow to chase growth.
But those days are over, and they aren’t coming back.
In the first quarter, 39 publicly-traded producers reinvested just 57%, or $8.9 billion, of the $15.5 billion in cash flow they generated, according to data compiled by RBN Energy. That’s down substantially from the 84% reinvestment rate seen in 2020 and a far cry from shale’s pre-pandemic boom years when producers needed to tap debt markets to fund their aggressive drilling programs.
Read the full article here: https://www.forbes.com/sites/daneberhart/2021/06/23/oilfield-service-firms-still-waiting-to-see-benefits-of-higher-prices/?sh=5e5a6af455a0
