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From: NOT-SURE@idiocracy.gov
On 6/13/22 3:29 AM, Dumpster Democrats wrote:
> In article
> lefty asswipes wrote:
>>
>> ...I spent all night taking it up the ass.
>
> (Reuters) - U.S. oil producers profiting from sky-high prices
> are doling out billions to shareholders and building cash
> reserves, a strategy irking lawmakers and voters struggling with
> record fuel prices while winning over Wall Street.
>
> Soaring fuel prices have boosted inflation to a 40-year record
> and are expected to drive up U.S. gasoline by more than a dollar
> to $6 a gallon by August. That prospect has some officials
> arguing the industry's focus on returns is benefiting a few at
> the expense of consumers.
>
> The tradeoff between rising payouts for just a single quarter
> and more spending on production has deprived the market of
> nearly half a million barrels of new oil daily, based on
> Reuters' estimates of potential output if half of existing
> investor payouts flowed to new oil and gas drilling.
>
> Earnings from major U.S. shale, which accounts for two-thirds of
> U.S. oil output, could hit $90 billion this year, up from $37
> billion in 2021, according to consultancy BTU Analytics, a
> FactSet Company. Its estimate covers only 32 publicly traded oil
> and gas producers.
>
> Executives are facing calls in Washington for windfall levies,
> which could cut into energy profits. A group of more than 30
> lawmakers recently urged a Congressional vote on a new oil tax.
>
> U.S. President Joe Biden on Friday slammed oil companies, saying
> they are intentionally holding off drilling more to pump up oil
> and share prices. [nL1N2XX1VP]
>
> "They're buying back their own stock, which should be taxed,
> quite frankly," Biden said.
>
> Executives and investors have argued that fuel prices are set by
> the market and retailers, not producers. Materials and labor
> shortages have limited how fast they can ramp up output, and to
> spend a lot more on new drilling would erode capital efficiency
> and lead investors to exit.
>
> Though analysts and oil executives do not expect a windfall tax
> to pass here, Britain recently imposed a 25% oil profit tax to
> offset consumer energy bills, giving hope to some U.S. lawmakers
> proposing the tax. And resistance to the tax may shrink as fuel
> prices soar and corporate earnings follow.
>
> "If the conservative government in the U.K. can support a
> windfall tax, we should be able to pass" a U.S. equivalent, said
> Representative Ro Khanna, Democrat of California, and a co-
> sponsor of the tax proposal.
>
> The goal is to raise $45 billion a year with proceeds funding
> payments to consumers.
>
> But a windfall tax would kill the incentive to drill more, said
> oil executives, and take away some of the earnings that fund new
> technology advances that led to the U.S. shale revolution which
> turned the United States into the world's top producer. It would
> also lessen oil firms' ability to raise outside financing.
>
> "This is a terrible idea," said Mike Oestmann, chief executive
> of shale producer Tall City Exploration. "If you want less of
> something, or some behavior, or some industry, tax it more
> heavily."
>
> PUMPING UP OUTPUT, NOT PRICES
>
> Motivating windfall tax advocates is the idea that U.S. energy
> companies are holding off production to maintain high prices and
> earnings. Companies returned some $9.51 billion to investors in
> the first quarter, according to energy consultancy Wood
> Mackenzie.
>
> If oil producers had spent half of the $9.51 billion on new
> drilling, it would fund some 660 new shale wells, according to
> Reuters analysis using energy tech firm Enverus' average costs
> of $7.14 million per shale well last year.
>
> Output varies per basin but on average, a new well can deliver
> some 672 bpd of oil, according to BTU Analytics. Based on the
> additional wells and the average new shale-oil output,
> production could be boosted some 450,000 bpd.
>
> Those extra barrels could lift U.S. production this year beyond
> the pre-pandemic record of 12.23 million bpd in 2019. The
> government projects output to rise 720,000 bpd to 11.92 million
> bpd in 2022.
>
> MAKING ENERGY STOCKS ATTRACTIVE AGAIN
>
> Between 2006 and 2019, the top 50 U.S. oil producers spent $170
> billion more in capital expenditures (capex) than they collected
> from operations, using debt and equity to cover the deficit,
> estimates independent oil analyst Paul Sankey.
>
> "Effectively, there were no returns" for shareholders, he said.
>
> Investors last decade shunned energy companies for their lack of
> returns and knocked their weighting in the S&P 500, a measure of
> shareholder interest, to less than 3% in 2020, from more than
> 16% in 2008. S&P energy stocks today are 5.1% with burgeoning
> earnings on high oil and gas prices.
>
> The change in sentiment came as producers shifted to a strategy
> of investing just a third of their cash flow into drilling and
> other capital expenses, compared with most of their cash flow
> two years ago, according to the latest data from Enverus.
>
> Focusing on shareholder returns over new production is not going
> away with the rise in energy prices. U.S. crude prices are up
> about 60% so far this year.
>
> "Not one large public (shale producer) increased capex in Q1 for
> increased activity," said Kaes Van't Hof, finance chief at shale
> firm Diamondback Energy Inc, in a recent twitter post.
>
> That willingness to hold the line on production and reward
> investors via dividends and buybacks "is changing the investment
> aura,” making energy stocks attractive again, said Matthew
> Stephani, president of Cavanal Hill Investment Management, part
> of BOK Financial Corp.
>
> The S&P 500 oil and gas sector is up more than 60% year-to-date,
> outperforming the broad-market index average, which is down for
> the year.
>
> Will investors accept a return to higher spending and lower
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