US shale investors still waiting on payoff via oil boom

Shale output growth continues to outpace forecasts. The U.S. Energy Information Administration This kind of month said United States production could top 11 million barrels per day by the end of 2018, a year earlier than that will had expected just a month ago.

Heltman has pressed shale firms to show restraint even amid rising prices. in addition to despite higher revenues, spending increases have so far been restrained.

Producers have pushed up spending plans for all of 2018 by 10 percent over last year, according to a tally of 41 of the 65 producers tracked by financial services firm Cowen & Co.

Some companies have maintained conservative assumptions for the average oil cost for 2018, budgeting for prices between $50 in addition to $55 a barrel.

A higher cost will mean they can cover fresh drilling investments in addition to still pay dividends.

Investors are searching for firms that will can find the optimal balance between the conflicting goals of controlling costs, paying dividends in addition to increasing production.

“We’re looking to invest in those companies who have been able to improve their production in addition to win the battle as far as cost of extraction,” said Derek Rollingson, portfolio manager of the ICON Energy Fund, which holds shares of more than a dozen U.S. shale producers.

A further rise in oil prices, however, could lead investors to take on more risk in addition to penalize more conservative companies, said Mike Breard, an energy analyst at Hodges Capital Management in Dallas.

“If oil is usually $65 by Easter,” he said, “investors are going to go to the companies in addition to say, ‘Why don’t you borrow more money in addition to drill more wells?'”

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