It comes as little surprise that capital markets for energy barely have a pulse. Discipline is the order of the day, and capital constraints are enforced on E&Ps by market pressure. A market mandate asks E&Ps to pursue multiple goals at once: keeping capex within cash flow, while pushing production higher at a sustainable rate, offering a rising dividend, buying back stock, rolling over debt, etc.

No easy task for what was once recognized to be a “capital-heavy” industry. And, for public E&Ps, life is made no simpler by an apparent assumption that the cadence of capital outlays and increases in output will tend to neatly match one another. Yes, capital efficiency may tend to move forward based on those factors, but capital projects do not always progress at a uniform pace each quarter.

So, if the spigot for sourcing capital is down to a dribble, how are E&Ps coping with capital constraints?

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