Exploration and production companies focused on lowering their capex and generating more free cash flow during the fourth quarter as oil prices remained range bound at $50 to $55 a barrel.

“While this strategy shift has been the primary demand from investors, the stock price reaction to these new plans was widely dispersed,” said William Featherston, an analyst with Credit Suisse, in a research report. “This is because [generally] lower spending results in slower production growth, which decreases NAV and expands EBITDX multiples [bad for the current E&P investor], while it only minimally improves near-term free cash flow.”

The quarter produced disappointing results overall with less than half of E&Ps that beat consensus for the total production, but most exceeded oil volume expectations, he wrote. 

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