Free Cash Flow Continues To Soar For North American Producers In Q3

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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 and 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.

“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 per cent 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.

The full report can be downloaded at this link.    

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