The tight formation revolution rewarded technically skilled managerial teams. Now Wall Street’s demand for shareholder-friendly free cash flow presages a different business philosophy.
Now that several E&Ps have cut 2019 capex by 15% to 20%, the question is whether management teams can adjust quickly enough to reach consistent cash-flow neutrality with sub-$60 oil. (Source: Hart Energy/Shutterstock.com)
Got free cash flow?
If not, it’s time to get with the program. E&Ps may have been reworking 2019 capex budgets lower in an uncertain environment as NAPE got underway in Houston but, to a company, all were certain on the main course of action going forward. Publicly held E&Ps universally agree that they will become shareholder friendly.
Richard Mason is chief technical director at Hart Energy. He has 20 years of experience in oil and gas writing and publishing. He served previously as director of research for PLS Inc. and as owner and publisher of The Land Rig Newsletter.