All Hat No Cattle

This good old Texas slight could be used to address most of the U.S. Energy industry, particularly as it relates to returns to shareholders. Non-conventional oil and gas in production  in the U.S. has no doubt proven to be a game changer in terms of global petro-dynamics, having implications for everything from Middle Eastern geo-political dominance to shifting margins across a wide disparate of industries. The advent of shale production has undoubtedly cemented the U.S. as the global swing producer, a spot heretofore held by the Saudis, unfortunately for domestic producers, that shift has coincided with a shift towards de-carbonization within the energy sector.  These two competing dynamics are taking place against the backdrop of a slowing global economy and its concurrent slowing in global energy usage. The result of  all of the aforementioned is that the debt- fueled- growth that has exploded across the entire domestic energy complex has ended in a resounding slump, driven primarily by a lack of sustainable profitability as measured by cash flows. Capital Markets, neither debt nor equity, are willing to continue to finance the” growth- for -growths sake” mentality that has driven the unsustainable ramp in production that has occurred since 2016.