US shale producers bleed cash despite slashed spending | Financial Times

US shale producers bleed cash despite slashed spending | Financial Times:

North American shale producers far outspent their revenue in the second quarter despite making deep spending cuts to survive the worst oil price crash in decades.

Operators idled rigs, sacked workers and even stopped producing oil as the coronavirus pandemic hit global energy demand and sent US crude prices below zero in April — but it was all “too little, too late”, analysts at the Institute for Energy Economics and Financial Analysis said on Tuesday.

The 34 shale oil and gas producers in the IEEFA study spent $3.3bn more on drilling and other projects during the second quarter than they earned by selling oil and gas, the sector’s worst performance in years, the institute said in a report.

“In financial terms, companies in the centre of the US fracking boom have been performing terribly for years,” said Clark Williams-Derry, the report’s lead author. “But last quarter was particularly dismal, characterised by low prices, falling revenues, collapsing investment and declining investor sentiment.”