THE GOAL TO GROW WITHIN FREE CASH ROW

摘要

It's ironic,really,that in an age when E&Ps are promising coy investors that they will behave more grown up and spend within cash flow,that first-quarter 2019 proved the worst outspend in two years.That's according to the folk at Wood Mackenzie in a late-July report titled,”Is Tight Oil on the Verge of Sustained Free Cash Flow Generation?”WoodMac reported that the outspend by tight oil independents reached $1.58 billion in the first quarter,the most since third-quarter 2017 when WTI averaged $48 per barrel,and compared with”just”$360 million of red ink year-over-year.But they had good reason,the analysts defended: E&Ps sought to take advantage of weakened service rates while oil was on an upswing.”The increase in WTI at the start of the year presented a rare opportunity for companies to accelerate activity in the midst of relatively low service pricing.”That outspend trend might play out again in second-quarter numbers too once they're all in.”U.S.independents may choose to continue to invest heavily in 2Q since the window to lock in lower costs is still open.”So WoodMac ponders out loud,”Will tight oil ever generate consistent free cash flow?”The prognosticators surmise”yes”despite the apparent seeming lack of capital discipline.”The promise of massive cash flow from tight oil has always been just around the corner,”the report said,”but what makes today different is the level of capital discipline exhibited across the industry,a much larger base of production generating cash flow,a depressed service pricing environment and an unwillingness of the public capital markets to fund tight oil.”