OPINION: Even with oil prices above $100 a barrel and gas prices averaging over $4 a gallon at the pump, frackers show little interest in ramping up output.
Even with oil prices above $100 a barrel and gas prices averaging over $4 a gallon at the pump, frackers show little interest in ramping up output.
“There’s this dance being played between OPEC and the U.S. producers, and that’s what I think is holding back U.S. producers,” he says. “Even when oil was at a reasonable level, these companies spent away their free cash flow, and always were issuing stock, generating net-negative free cash flow. The stocks never were sustainable outperformers,” Montanus says, adding that major oil producers such as Exxon Mobil XOM, -2.81% and Chevron CVX, -1.75% could fit in that category.
Production is rising Despite public companies capping output, crude-oil production is up, according to the U.S. Department of Energy’s Energy Information Administration. Most recent data show the U.S. pumped about 11.6 million barrels per day of the sticky stuff, up 4.4% versus a year ago. Just before the pandemic, the U.S. was close to producing 13.3 million bpd. Almost all of that increase comes from private companies in the Permian Basin, Thummel says.
These producers may also be trying to figure out where they fit in the future. There’s a push for energy independence and energy security from oil-producing nations, but energy independence also looks a lot like renewable energy, which is growing. The rise of environmental, social and governance investing means some people refuse to buy fossil fuels companies, Montanus adds.