There’s no question that the vast majority of E&Ps now understand they have a mandate to prioritize returns to investors over growth. The problem is that the fine print detailing precise proportions—what level of returns is the right balance for a certain rate of growth—has been arriving slow. As one analyst said, “The key question is: What will investors reward?”

The uneven response by investors to certain fourth-quarter earning results would indicate that the ideal recipe is still in the making. Take Concho Resources Inc. for example. In announcing an admittedly weak final quarter, Concho cut its 2019 capex outlook by 17%, while lowering oil production by only 7% below prior guidance. Annual oil growth in 2019 was moderated at 26% to 30% from 35% to 40% earlier.

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