Shale-Gas Drillers Brace for $8 Billion Cash-Flow Shock on Price Drop
- Citigroup says some companies to shut shale wells to cope
- US gas has tumbled 80% since touching 14-year high in August
Rig hands thread together drilling pipe at a fracking site atop Marcellus Shale in Washington Township, Pennsylvania.
Photographer: Ty Wright/Bloomberg
Skyrocketing energy prices turned US natural gas drillers into cash machines that showered shareholders in returns over the past two years. But the heyday appears to be over.
A US supply glut that no one saw coming triggered a collapse in the prices of the power-plant and furnace fuel, prompting analysts to slash free-cash-flow estimates for the sector. For a group of six gas-focused shale drillers that includes EQT Corp., that means roughly $8 billion that was expected to be available for dividends and share buybacks is now off the table. In just four months, the collective 2023 cash-flow outlook for the group shriveled by 75%.