U.S. shale producers have slashed total debt by as much as $26 billion, with stronger balance sheets amounting to huge wins for shareholders
since the start of the pandemic, thanks to the capital discipline that has held for more than two years now and to the high cash flows producers have generated this year as oil and gas prices soared. The 64 North American E&P firms rated by Moody’s now have $217 billion of outstanding debt, according to the agency’s report cited by The Wall Street Journal.
As a whole, U.S. shale producers reported record or close to record earnings and cash flows for the second quarter amid soaring commodity prices. Thenow goes to paying down debts and paying shareholders, who are finally seeing the rewards of being invested in the shale patch after years of disappointing returns when companies prioritized production to payouts.
The shale patch, which generated negative cash flows in nine out of the last ten years, will likely see record-high free cash flows in 2021-2022 that could overcome the decade-long loss of $300 billion, according to Deloitte.
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