Liam Denning, Columnist

Shale CEOs Lack Incentive to Find Your Holy Grail

Boosting production and cash flow is rare, but pay practices don't value it.

June 13, 2018 at 12:00 PM UTC

Liam Denning is a Bloomberg Opinion columnist covering energy. A former banker, he edited the Wall Street Journal’s Heard on the Street column and wrote the Financial Times’s Lex column.

Lighting gas and cash on fire.
Photographer: David McNew/Getty Images North America

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Finding a fracker who can simultaneously gush more oil and money is shale’s equivalent of the holy grail.

Yet there’s hope. Surveying 57 North American exploration and production companies, Bob Brackett of Sanford C. Bernstein found that, in the first quarter, they collectively managed a trifecta of raising oil production by 10 percent while also earning positive net income and free cash flow. The last time all three of those metrics were in the green was eight years ago. In fact, the first quarters of 2018 and 2010 were the only times that happened in at least the past 33 quarters.