As U.S. shale oil activity recovers, still coping with the coronavirus-driven demand slowdown, a new business model has emerged and companies are reinvesting less than previous years, according to analysis from Rystad Energy.

How tight oil businesses are run began to change dramatically last year but the latest downturn hastened the shift. Amid investor demand for more sustainable energy development, capital discipline, efficiency gains and free cash flow generation have become the norm. Many are also putting less back into the shale business compared to previous years as others merge, setting the stage for moderated growth.

Historically, the tight oil industry has reinvested more than 100% of its operational cash flow back into drilling and completion costs, said Artem Abramov, partner and head of shale research for Rystad Energy.

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