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U.S. Shale Spending Is Under Fire Again

Friday, June 7, 2019

1. U.S. shale still burning cash

- A cross-section of 29 U.S. shale companies reported more than $2.5 billion in negative cash flow in the first quarter of 2019, which was worse than the fourth quarter of 2018, according to a new report from the Sightline Institute and the Institute for Energy Economics and Financial Analysis (IEEFA).

- For instance, Hess (NYSE: HES) posted $433 million in negative cash flow, while EOG (NYSE: EOG) reported $393 million in negative cash flow. Cabot Oil & Gas (NYSE: COG) and EQT (NYSE: EQT) – two Marcellus shale gas producers – posted $390 million and $500 million in positive cash flow.

- The report also found that between 2010 and 2019, the companies posted $184 billion in negative cash flow.

- “Frackers’ persistent inability to produce positive cash flows should be of grave concern to investors,” the report’s authors wrote. “Until fracking companies can demonstrate that they can produce cash as well as hydrocarbons, cautious investors would be wise to view the fracking sector as a speculative enterprise with a weak outlook and an unproven business model.”

- The recent decline in the oil market could hurt these figures even more if prices fail to rebound.

2. Permian gas flaring breaks records

- Gas flaring in the Permian basin surged to a record high in the first quarter at an average of 661 million cubic feet…



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