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Is U.S. Shale Finally Cash Flow Positive?

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Friday, August 23, 2019

1. Shale ekes out slight positive cash flow

- The U.S. shale industry may have posted a very slight positive cash flow figure for the second quarter, depending on the companies included in the analysis. The swing into positive territory puts the industry into a novel position, after years of hefty red ink.

- According to Rystad Energy, a survey of 40 U.S. shale companies revealed a $110 million in positive cash flow in the second quarter. “That is an industry first,” Rystad Energy senior analyst Alisa Lukash said in a statement. “The five dollar increase in the average WTI oil price from the first to the second quarter of 2019, coupled with operators’ efforts to keep spending within their initial budgets, resulted in a slight surplus of adjusted CFO for total capex.”

- Cash flow is now paramount, as investors grow skeptical of shale. No company has made a public offering since 2017, and new bond issuance fell to just $4.8 billion in the first half of 2019, down 70 percent from the $16.4 billion semiannual average over the last five years.

- A separate survey by IEEFA and the Sightline Institute found $26 million in positive cash flow from 29 shale companies in the second quarter. “There were winners and losers this quarter, but overall, the oil and gas sector is still underperforming on virtually every financial measure,” said Clark Williams-Derry from Sightline Institute.

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