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U.S. Shale’s Debt Detox Is A Huge Win For Shareholders

ByTsvetana Paraskova- Oct 12, 2022, 7:00 PM CDT

• American oil and gas producers have slashed debt by more than $26 billion since the end of 2019.
• The structure shift from spending to exercising capital discipline has been celebrated by shareholders.
• Moody’s has revised up its ratings of a number of U.S. producers in recent months, citing debt reduction as a primary factor for the upgrades.

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North America’s oil and gas producers have reduced their total debts by $26 billion since the end of 2019 as the shale industry made the structural shift from spending to grow production to increasing shareholder returns and strengthening balance sheets. The significant debt reduction at North American oil and gas producers, coupled with capital discipline at most shale firms, points to lasting gains for the credit quality of more than 60 such exploration and production firms rated by Moody’s, the credit rating agency said in areportthis week.

The industrycut debt by 11%since the start of the pandemic, thanks to the capital discipline that has held for more than two years now and to the high cash flows producers have generated this year as oil and gas prices soared. The 64 North American E&P firms rated by Moody’s now have $217 billion of outstanding debt, according to the agency’s report cited by The Wall Street Journal.

Moody’s has revised up its ratings of a number of U.S. producers in recent months, citing debt reduction as a primary factor for the upgrades.