HOUSTON (Reuters) – A sustained rise in global oil prices has U.S. shale producers pondering something few expected to be considering after last year’s tumble: how to allocate rising cash flows among new production, dividends and stock buybacks.
U.S. shale producers will generate about $73.6 billion in cash from operations this year, up nearly a third over last year, according to data firm Rystad Energy, based on oil selling for $50 a barrel.
Shale patch results that begin rolling out Tuesday with ConocoPhillips are expected to remain in the red, but lower spending and oil and gas price gains will deliver what is expected to be the start of stronger cash flows. Producers that pledged to hold down production may be tempted to pump more.
“It is going to be a banner year for free cash flow to shareholders,” predicted Dane Gregoris, a director at energy consultancy Enverus.