CRUNCH TIME

US shale drillers keep their powder dry for now, but it remains unclear how they’ll respond in 2022 as the declines in drilled but uncompleted wells (DUCs) and inventories come to bear, says Johannes Van Der Tuin Increasing global oil demand has started to revive US hydrocarbon production, but any recovery is nascent at best and – as with other areas of the global economy – the pandemic accelerated trends within the US shale patch that had already been at work prior to 2020. As the latest round of US earnings calls highlighted, management teams and investors remain focussed squarely on free cash flow. ‘Capital stewardship’ had already become the watchwords for US exploration and production (E&P) executives before COVID-19 and remains so today. Additionally, environmental, social and governance (ESG) pressures continue to ramp-up from investors and are likely to stick around for the foreseeable future, particularly given the change of administrations in Washington. As a result, after the last year and a half of market tumult, management teams are understandably gun shy about forward-looking capital expenditures and aggressively raising production, instead...