America’s shale oil companies are enjoying a cash bonanza, as soaring oil prices and months of capital restraint transform the fortunes and balance sheets of a sector once notorious for debt-fuelled drilling sprees.
Operators will rake in about $180bn of free cash flow — operating income minus capital and maintenance outflows — this year at current crude prices, according to research company Rystad Energy. That compares to huge losses amassed during a decade of fast supply growth that crashed to a halt just before the pandemic.
And the amount of cash generated by operators this year will be greater than the total earned over the past 20 years, according to S&P Global Commodity Insights.
“It’s a tsunami of cash,” said Raoul LeBlanc, head of S&P’s North American oil and gas division. “The companies have almost finished the balance sheet repair. ”
The shale profit surge has brought a recovery in operators’ equity prices, with US oil and gas producers’ shares defying a broader market sell-off this year.