It’s ironic, really, that in an age when E&Ps are promising coy investors that they will behave more grown-up and spend within cash flow, that first-quarter 2019 proved the worst outspend in two years. That’s according to the folk at Wood Mackenzie in a late-July report titled, “Is Tight Oil on the Verge of Sus­tained Free Cash Flow Generation?”

WoodMac reported that the outspend by tight oil independents reached $1.58 billion in the first quarter, the most since third-quarter 2017 when WTI averaged $48 per barrel, and compared with “just” $360 million of red ink year-over-year. But they had good reason, the analysts defended: E&Ps sought to take ad­vantage of weakened service rates while oil was on an upswing.

“The increase in WTI at the start of the year presented a rare opportunity for companies to accelerate activity in the midst of relative­ly low service pricing.” That outspend trend might play out again in second-quarter num­bers too once they’re all in. “U.S. indepen­dents may choose to continue to invest heav­ily in 2Q since the window to lock in lower costs is still open.”

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