The Shale Party Is Just Getting Started

The Shale Party Is Just Getting Started

Oil field workers with Wisco work on pump jack in Tioga, N. D. (Photo by Ken Cedeno/Corbis via Getty ... [+] Images) The shale industry is making it rain for investors, generating record free-cash-flow (FCF) on the back of pandemic-related cost-cutting and rising oil prices. And the party is just getting started. This marks a step-change for shale, a sector infamous for its "cash burn" “” where capital expenditures exceed cash flow from operations “” since its inception a decade ago. The sector's newfound profitability has made U. S. exploration and production (E&P) companies darlings with investors in recent months. It could prompt greater access to capital markets if these firms can stay the course and resist the urge to invest in lower-return growth projects. And based on recent Q4 earnings presentations, the leading U. S. shale E&Ps plan to do just that. The result will be an unprecedented windfall for these companies and their shareholders. Consultancy Rystad Energy estimates that the U. S. shale industry will generate about $73. 6 billion in cash flow from operations this year, up nearly a third over last year, based on a WTI price of $50. And that forecast looks far too low,