- The shale oil revolution has boosted production and made the U.S. the world's oil and gas champion, but paltry returns have prompted big shareholders to insist that companies focus on improving returns.
- WSJ reports that a September meeting in New York of 12 major shareholders in U.S. shale oil and gas producers resulted in a commitment to force operators to turn profits, and in the following weeks normally cordial company presentations and investor meetings became more confrontational.
- Not long after, Anadarko Petroleum (NYSE:APC) announced plans to buy back $2.5B in stock rather than pour money back into production and changed executive compensation metrics to focus more on returns.
- At Devon Energy (NYSE:DVN), major shareholder Invesco and others began pestering CEO David Hager to improve returns, and DVN recently concluded it could start to pay a dividend or buy back shares and plow less money back into new wells.
- U.S. production appears on course to surpass 10M bbl/day in 2018, breaking a record set in 1970, but investors have started to pull back, with ~$800M flowing out of energy focused ETFs YTD through November, compared with $6B-plus of inflows in 2016.
- Not everyone is convinced it is working: “If we do get to $60, it’s all guns blazing all over again,” says Jan Stuart, chief energy strategist at Cornerstone Macro. “There is no such thing as a Texas wildcatter getting religion.”
- ETFs: XLE, VDE, ERX, XOP, OIH, ERY, DIG, BGR, FENY, DUG, IYE, GUSH, IEO, DRIP, FIF, PXE, NDP, RYE, PXJ, FXN, CRAK, DDG, NANR, JHME, ERYY, FTXN, ERGF
- Now read: Paradigm Shift - Energy Stocks Are On The Cusp Of A Multi-Year Bull Trend
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