Scorecard Shows Hits, Misses For US Shale Players

HOUSTON—The U.S. shale industry gets an A-plus when it comes to growth, considering the rapid pace of barrels of oil being pumped from shale plays, but it fails in terms of returns of capital—something that frustrates investors.

That’s according to Bob Brackett, a senior analyst for Bernstein Research. Speaking in front of a standing-room-only crowd on opening day of the Unconventional Resources Technology Conference on July 23, Brackett gave the industry marks on a scorecard during an era dubbed the “Fracocene,” described as a time when oil and gas production in North America—characterized by long-lateral horizontal wells with massive hydraulic fractures—is strongly influencing the world’s energy economy.

“Growth is an A-plus. There is no asset on the planet growing oil faster. The U.S. is growing oil liquids year-over-year at a rate of 2 million barrels per day,” he said before handing out a grade of C-plus for discipline, which he said may be returning. Earlier he pointed out how the industry has emerged from a period of overinvestment. “We have behaved for the last six quarters. … This is a sector that lives within cash flow, gives some cash back to investors, earns a double-digit rate of return.”