US Drillers Continue to Focus on Returns Over Output Growth

The US shale industry has not changed investment in production despite high market prices with focus on shareholders returns rather than output growth.

• White House chief energy adviser Amos Hochstein this month attacked US shale firms for failing to invest more in raising output when they are making record profits.
• In 2017 to 2019 US tight oil output rose from 4.4mn b/d to 8.3mn b/d as upstream companies reinvested more cash than they earned from operations according to EIA.
• Shareholder returns were only 10pc of cash from operations, but last quarter this had risen to 22% according to Argus. Last quarter a further 21% was directed to share repurchases with capital expenditure at only 42%.
• US output growth is this year projected at just a 1.5mbpd from Dec 2020 with average annual investment in 2021-22 only two-thirds of 2017-19 levels. Most of the growth comes from the Permian basin. The EIA STEO predicts US onshore output up just 510kbpd in 2023.