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Price Fall Won't Derail US Oil Cash Bonanza

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Oil prices have taken a beating, but make no mistake, the US oil patch is still flush with cash. Oil prices still sit more than 60% higher than the $40 per barrel West Texas Intermediate (WTI) threshold many public producers set their 2021 budgets against — and held onto even when WTI crossed $80. The adherence to strict capital discipline looks prudent as volatility once again rocks oil and a new Covid-19 variant threatens to add more sloppiness to early-2022 balances. But producers are also preparing to add modest growth next year, if and when the market needs it. Roughly 20 leading publicly traded US oil producers tracked by Energy Intelligence raked in more than $35.7 billion in free cash flow during the first nine months of 2021. That extra cash is coming in after companies funded capital spending and dividends, and is the direct result of investors cracking the whip on anyone hinting at adding production while Opec-plus sits on significant spare capacity and global demand remains in recovery. Energy Intelligence’s Oil Market Service estimates US oil output will exit 2021 roughly 500,000 barrels per day higher than it began the year, but private producers and modest moves to stabilize output after a punishing 2020 are behind the uptick.

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