Why Shale Drillers Are Pumping Out Dividends Instead of More Oil and Gas - 23 mai 2022
Executives at firms including Pioneer Natural Resources Co. (US.PXD), Occidental Petroleum Corp. (US.OXY) and Range Resources Corp. (US.RRC) were once encouraged by compensation plans to produce certain volumes of oil and gas, with little regard for the economics. After years of losses, investors demanded changes to how bonuses are formulated, pushing for more emphasis on profitability. Now, executives who were paid to pump are rewarded more for keeping costs down and returning cash to shareholders, securities filings show.
Though U.S. oil and gas production has risen from lockdown lows, output remains below prepandemic levels even though crude prices have doubled since then, to about $113 a barrel, and natural gas has quadrupled, to more than $8 per million British thermal units.
When the Organization of the Petroleum Exporting Countries launched a price war in late 2014, oil crashed and bankruptcies mounted among North America’s free-market producers. Shareholders and activist investors homed in on pay plans that rewarded production growth no matter what price the barrels fetched. Investors tossed lifelines to many firms, buying more than $60 billion of new shares that producers sold to lighten their debt loads and stay afloat.