Throughout the U.S. shale oil and gas boom of the past 15 years, one of investors’ greatest concerns has been that the exploration and production companies needed continual infusions of cash to finance their investment programs.
After the rise in crude prices this year, it looked as though those fears could be put to rest: in the third quarter of this year the U.S. E&P sector was able to cover its capital spending from its operating cash flows, if only barely. The plunge in oil prices over the past two months is bringing those concerns gushing to the surface again.
In the third quarter, a sample of 50 of the largest listed U.S. E&P companies in aggregate reported operating cash flows that were higher than their capital spending, for the first time since 2011. Exxon Mobil and Chevron, the country’s largest oil groups, also reported healthy profits from their U.S. operations, which lost money in 2017.