The quarterly report of 2022q1 shale oil company shows that the growth of capital expenditure reflects rigidity
Stimulated by high oil prices in the first quarter of 2022, the updated capital expenditure and production guidelines of shale oil companies in 2022 were not significantly adjusted with the rise of oil prices.
Exploring the underlying logic of capital expenditure rigidity from cash flow distribution
The priority of cash flow distribution of major shale oil enterprises is to improve the return on capital. Cash flow gives priority to distributing cash to shareholders in the form of dividend and stock repurchase. The reinvestment proportion continues to decline. It is estimated that the reinvestment proportions of Fang, pioneer energy and marathon oil will be 31%, 28% and 20% respectively in 2022.
Limited growth of shale oil production
The increase of capital expenditure is mainly used for cost inflation adjustment. Conservative capital expenditure and the strategy of stabilizing production limit the possibility of significant growth of shale oil production in the United States.
Risk warning: the shortage of labor and supply chain intensifies, driving up costs and weakening profits; The risk of crude oil demand falling short of expectations under the influence of the epidemic; The EU may not reach an agreement on energy sanctions against Russia, and the crude oil gap is less than the expected risk.
