HOUSTON – After two years of deep spending cuts, U.S. oil companies have reduced a big gap between the cash they spend on drilling and the income from producing oil.
Domestic drillers outspent their operating cash flow by $10 billion in the first three months of the year, down from a peak of more than $25 billion in last year’s first quarter, the Energy Information Administration said in a new report Monday.
The numbers essentially mean the U.S. oil industry that ran up billions in debt to fund the shale energy surge has become, at least for now, more stable after a few high-flying years that ended in an oil market crash and bankrupted scores of companies. In 2012, for example, drillers spent twice what they made from filling oil barrels.
For the 39 oil companies in the EIA’s report, operating income peaked at nearly $40 billion in the third quarter of 2014, and spending topped $60 billion.
Both figures were cleaved in half by the first quarter of 2016 as drillers cut spending faster than their income dropped. The EIA says that increased the industry’s ability to finance itself after relying heavily on banks and junk-bond investors in the years of $100 a barrel oil.
“The need for oil companies to find external sources of funding may decline, which could reduce financial strain in the coming quarters,” the EIA said.