Author: Evaluate Energy

Shareholders of U.S and Canadian oil and gas producers continue to benefit from record levels of free cash flow across the upstream sector.

Evaluate Energy’s latest cash flow report shows that 82 North American E&Ps allocated around 27 per cent of all cash used in Q1 to pay dividends or buy back shares. This is a meaningful uptick in total dollar terms and in proportion to other uses of cash.

“Repaying debt was initially a key priority for many North American oil producers as they restored operations impacted by the pandemic,” said Mark Young, report author and senior analyst at Evaluate Energy. “Since the start of Q4 last year, however, this focus has shifted towards shareholder returns via dividend payments and share buybacks.

“Dividend payments and share repurchases saw very slight increases over Q4 spending but rank far higher than anything before then. Q1’s $11 billion on dividends and buybacks is a greater outlay than every quarter in 2020 combined.”

Much like capital spending increases in recent months, these latest increases in shareholder returns are being seen across the industry, with no distinct peer group of companies solely responsible.

“Thirty-four companies, or 41 per cent of our full group of 82, paid dividends to common shareholders in Q1 2022. This is a record for the study period,” said Young. “49 per cent made a net repurchase of shares in Q1 2022, which was also a record.”

For more information on dividends and buybacks for oil, gas and oilsands producers in the U.S. and Canada, download Evaluate Energy’s latest cash flow report.

A significant leap in operating cash flow in Q1 2022 allowed oil and gas producers across the U.S. and Canada to enjoy record levels of free cash flow – again.

The latest cash flow report from Evaluate Energy shows that 82 North American oil and gas companies recorded free cash flow of $29.8 billion in Q1, a $7.3 billion increase over Q4 2021.

“Total Q1 operating cash flow for the group came in at almost $45 billion – the sum of all four quarters in pandemic-hit 2020,” said report author Mark Young, Senior Analyst at Evaluate Energy.

“While capital spending has not kept pace with operating cash flow, spending has consistently increased since Q3 2020. We’re now seeing spending across the industry similar to pre-pandemic trends. Q1 saw the first quarterly capex spend of over $14 billion since early 2020, and capital spending increased to over 35% of total cash used in a quarter for the first time since Q2 2021.”

Data shows capex increases across the industry with no distinct group of producers responsible for the bulk of any spending rise.

“Fifty of the 82 companies in our study group increased spending in Q1 compared to Q4, the sixth quarter in a row where more than 48 increased quarterly spending, after only 10 did so in Q2 2020 at the height of the pandemic,” added Young.

“Latest guidance shows that these spending increases in early 2022 should be sustained throughout the year, with 2022 budgets typically larger than those we saw in 2021.”

For more on the latest cash flow, capex, debt, dividend and share buyback trends for oil, gas and oilsands producers across North America, download the full Evaluate Energy cash flow review.

Solar, wind energy and hydrogen projects attracted significant deal interest from companies traditionally focused on upstream oil and gas in 2021 – a year that saw major upstream investment across the entire green energy space.

A new mergers and acquisitions report from Evaluate Energy shows that while wind and solar assets continued to attract greater levels of interest from E&P investors in terms of pure deal count – 56% of the 81 deals agreed – a growing number of deals were agreed in less well-established industries.

“2021 saw a greater number of emerging sectors gain traction among oil and gas players,” said Mark Young, report co-author and Senior Analyst at Evaluate Energy. “In terms of highlights away from wind and solar, we saw eight deals made relating to hydrogen production projects and six deals apiece in the electric vehicle charging and biofuels spaces.

“Investor and public pressures to diversify portfolios has led to oil and gas producers spreading into all sorts of new low-carbon technologies and innovative or renewable energy producing projects around the world.

“We would expect this trend to continue, especially with many producers recently going public with ambitious net zero targets for this decade and beyond.”

For more detail on 2021 green energy deals, as well as investments made by the most active E&P companies in green energy – such as Shell, Eni, TotalEnergies, BP and Chevron – download Evaluate Energy’s latest M&A report at the link below.

A new ESG learning platform is providing the skills and tools to fill a vital knowledge gap in the oil and gas industry.

Launched this week, Evaluate Energy ESG Learning offers on-demand and live courses delivered by leading experts in oil and gas. The new platform reflects a desire among employers to build ESG capability throughout their organizations. Executives and front-line staff are seeking new ‘ESG skills’ to support businesses and position them for long-term growth.

“The O&G industry has the most complicated ESG challenges of any industry,” said Bemal Mehta, Managing Director, Energy Intelligence, Evaluate Energy. “Organizations like the World Energy Council call this the Energy Trilemma: balancing energy security, energy equity and environmental sustainability. Our learning platform provides the knowledge and practical tools to address the unique ESG issues facing operators.”

Evaluate Energy ESG Learning is the first education platform designed for the O&G industry with its fit-for-purpose curriculum approach, said Mehta.

On-demand and live courses provide the knowledge to support strategic and operational ESG efforts. Foundational and advanced course options are available.​ Courses relevant to specific oil and gas geographies and regulatory environments will also be provided.

“Many companies are yet to acquire the full complement of ESG skills to navigate this dynamic and challenging environment,” said Mehta. “They will need to provide their teams with leading-edge skills and knowledge.”

Courses are developed with extensive participation and consultation with organizations leading ESG efforts.

The first on-demand course is ‘ESG Essentials’ for O&G Executives. Click here for the course summary and pricing.

Find the ideal course for you and your team here: Evaluate Energy | E-Learning

Record levels of free cash flow continue to be generated by North America’s oil and gas producers according to a new report from Evaluate Energy that outlines how that cash is being used.

Free cash flow – the difference between operating cash flow and capex – reached a combined $19.1 billion in Q3 2021 for a study group of 84 U.S. and Canadian producers. The full report is available at this link.

“No quarter since the start of 2018 has seen a higher total operating cash flow than Q3’s $32.5 billion, while capital spending was flat from Q2 to Q3 for the study group,” said Mark Young, report author and Senior Oil & Gas Analyst at Evaluate Energy.

Four peer groups within the report are based on whether a producer has a U.S. or Canadian headquarters plus their respective oil weightings. Canada’s five oilsands majors are separated out into a fifth peer group.

“Companies treated capex priorities very differently in Q3 compared to Q2,” Young said. “Every group we examined cut capex as a percentage of operating cash flow compared to Q2.

“Ironically, in Q2 it was almost entirely the reverse – save for U.S. oil producers, every group saw capex increase as a percentage of operating cash flow compared to Q1. Debt repayments took centre stage in Q3 instead of capital spend.”

For the combined group of 84, capital spending being flat at $13.4 billion in Q3 meant capex came in at just 41% of operating cash flow.

The report also shows how far each group used extra cash flow on repaying debt and increasing shareholder returns via dividends and share repurchase plans.