Shale companies pumped as much as they could whenever oil prices rose sharply over the past decade. But with the price of crude topping $70 a barrel, they are barely doing enough to sustain U.S. production, The Wall Street Journal reports.
Frackers have been forced to rein in spending and live within their means after many investors lost faith in the companies following years of poor returns, lenders reduced their credit lines and capital markets showed little interest in funding expansive new drilling campaigns.
The result is that shale drillers, which in the past have played the role of the oil world’s swing producer by quickly increasing output to meet demand, are largely standing pat for now, as the economic recovery leads to a resurgence of global oil and gas prices.
The companies are raking in more cash than ever, but instead of pumping that money back into drilling as they have historically done, large producers such as Occidental Petroleum Corp. and Ovintiv Inc., the company formerly known as Encana Corp., have said they plan to focus on reducing debt, keeping U.S. output flat. Read the full story.