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THE BLOODBATH IN U.S. SHALE STOCKS CONTINUES: Worst Is Yet To Come

by SRSrocco

It seems as if investors are no longer willing to finance the U.S. Shale Oil Industry Black Hole.  And why should they?  One of the largest shale players in the Permian, Pioneer Resources, suffered its eighth consecutive year of negative free cash flow.  In 2018, Pioneer spent $541 million more on capital expenditures than it made from cash from operations and if we add up all the eight years, it’s a grand total of $6.8 billion in negative free cash flow

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https://srsroccoreport.com/the-bloodbath-in-u-s-shale-stocks-continues-worst-is-yet-to-come/

3 Comments

  1. More and more I read – more and more I believe you are getting this wrong.
    Hope you have seen Pioneer data also…
    http://investors.pxd.com/static-files/a770531f-4934-4ebd-82fd-4ef11e73abf8
    Slide 24 – 10%+ growth in oil production in 4Q. Doubt if majors would be anywhere near that – global oil supply growth of 1.5-2% in 2018 (and OPEC picked up share despite Iran).
    Slide 9 – breakeven point sub-US$40.
    In fact I would be really worried on oil prices (and on India/EM investment thesis) if Permian producers go silent on capex/funding. US/Shale being the driving force behind oil supply, with OPEC now declining.
    https://determinedinvest.wordpress.com/2019/03/19/the-case-for-black-gold-part-4/

    • oh I agree with you that shale production is going up and US is now the largest producer thanks to shale. what this article does it differentiate between oil producers which are into shale and only shale producers. these shale producers are in trouble not the big oil guys

  2. By the looks of it debate is going to mute if we have few such weeks of inventory drawdown. And my analysis suggests oil market is in deficit now (around 0.5mbd – how US inventory is declining 1+mbd is beyond me, yet). if so, WTI is soon going to $70. And then the debate of whether independents can survive at WTI $40-50-60 will have to be put on hold for when WTI comes back to those levels (not till 4Q19 at least). Take note PXDs realizable price is US$7-8 below WTI (just quoting their pres above – not sure why, although transportation/pipeline constrains/costs could be one factor).
    PS: PXD up 7% last 5 days – outperforming oil majors.
    PS2: Notwithstanding the disagreement, tx a ton for sharing all your work/ thoughts. Very helpful for newbie macro investors such as self.

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