US independent shale oil producers plowed money into output growth in the second quarter at the fastest rate in three years, a departure from the fiscal discipline that’s been the industry’s focus, according to a report from research firm Rystad Energy.
The cash injection comes as the steep drop in output from US shale wells is turning out to be worse than expected, Rystad notes. The depleted fields have forced oil drillers to work even harder to keep production from slipping, research firm Enverus said in a separate study earlier this month.
But rising reinvestment rate is unlikely to last. “As inflationary pressures ease in the coming quarters and oil prices rebound, this spike will be a short-term anomaly instead of a shift of strategy,” said Matthew Bernstein, senior upstream analyst at Rystad. This means shale companies will likely stay focused on paying out shareholders in the form of buybacks and dividends as they have in the past two years.
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