Oil and Gas Investor At Closing: Love Those Proceeds

It’s investment time for E&Ps. The boom is on, but it is not a boom in drilling rigs or crazy investments.

(Source: Shutterstock.com)

[Editor's note: A version of this story appears in the June 2021 issue of Oil and Gas Investor magazine.]

Boy howdy! It’s investment time for E&Ps. The boom is on, but it is not a boom in drilling rigs or crazy investments. The only land grab that makes sense now is for snapping up contiguous acreage. This boom is about delivering free cash flow (FCF).

During their first-quarter conference calls, E&P companies showed they can deliver FCF and use it wisely—whether to pay down debt, buy back shares or distribute it. They are finally transferring wealth from their coffers to investors’ bank accounts, a welcome and necessary outcome of the strategy that is capital discipline.

In investor presentations, the leadoff slides in the investor-targeted slide decks were all about money—how to make it and better spend it—and not about those boring old operational details such as acreage position, wells drilled, EURs and frac stages or water. No. Although important, those details came later in the presentations.

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Leslie Haines

Leslie Haines is executive editor-at-large for Oil and Gas Investor. One of the most respected oil and gas industry journalists in the business, she is celebrating more than 30 years at the magazine.