US shale companies enjoy ‘tsunami of cash’ on high oil prices

US shale companies enjoy ‘tsunami of cash’ on high oil prices

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.

It comes as Russia’s invasion of Ukraine has driven up oil and gas prices, prompting calls from the White House for shale operators to drill more wells.

The number of rigs in operation has picked up in recent months, led