The Dawn Of A New Era For US Shale -- Oilprice -- June 27, 2021

Link to Tsvetana Paraskova. 

Higher oil prices and capital expenditure discipline are setting the stage for the highest free cash flow on record for the world’s exploration and production companies this year. And U.S. shale firms—set to generate $60 billion free cash flow—are primed for playing a key role in the record-breaking free cash flow from global upstream operations.   The U.S. shale patch is expected to be the biggest beneficiary of capex discipline and high oil prices, as well as the largest contributor to the highest-ever free cash flows from the upstream business globally, according to independent research firm Rystad Energy.

The world’s public oil firms are set to see their combined free cash flow—all cash flows from upstream activity excluding such from financing or hedging effects—surge to a record-breaking $348 billion in 2021. According to estimates from Rystad Energy, this would be $37 billion higher than the previous all-time high of $311 billion, which was generated in 2008. Back then, just before the financial crisis, oil prices averaged $100 a barrel that year.  

The key driver of record cash flows would be the U.S. shale patch, which is estimated to rake in nearly $60 billion in free cash flow before hedging effects, Rystad Energy forecasts. 

This would be quite a U-turn in the financial fortunes of U.S. shale drillers, which have struggled to generate positive free cash flow for a decade since the shale revolution began.  

And unlike tech companies like Apple, most of these oil companies are going to return this free cash flow directly to investors.

More:

The world’s public oil firms are set to see their combined free cash flow—all cash flows from upstream activity excluding such from financing or hedging effects—surge to a record-breaking $348 billion in 2021. According to estimates from Rystad Energy, this would be $37 billion higher than the previous all-time high of $311 billion, which was generated in 2008. Back then, just before the financial crisis, oil prices averaged $100 a barrel that year.  

The key driver of record cash flows would be the U.S. shale patch, which is estimated to rake in nearly $60 billion in free cash flow before hedging effects, Rystad Energy forecasts. 

This would be quite a U-turn in the financial fortunes of U.S. shale drillers, which have struggled to generate positive free cash flow for a decade since the shale revolution began. 

Other data points:

• Bloomberg: free cash flow of $30 billion
• Deloitte: $30 billion represents just one-tenth of the $300 billion in net negative cash flow the US shale industry lost in the fifteen years since the first shale boom (a meaningless statistic)
• $300 / 15 = $20 billion per year on average

Much more at the link.