A large amount of money was invested to expand oil production, and then the history of falling oil prices due to increased supply has passed. The US shale oil was reborn under the tragic experience of the COVID-19. Even if the current international oil price has exceeded US $100 / barrel, and even if most oil companies have generated record high cash flow, US shale oil producers have chosen to continue to adhere to capital control discipline.
In the past few months, these super large shale oil producers have obtained a lot of cash flow under the scenario of high oil prices, but this time they did not invest the cash in expanding reproduction, but chose to repay shareholders. With the disclosure of the financial report in the first quarter of this year, American listed oil companies choose to maintain control of capital investment, implement the moderate growth plan of production, and invest a lot in new wells to expand production scale, which is no longer the preferred goal of shale oil producers.
Investors in oil companies have also benefited greatly from controlling capital investment. So far, the top 20 companies with the highest annual return on investment in the S & P 500 are oil companies, including Occidental, Cotera energy, Valero, marathon oil, APA, Halliburton, Devon Energy, Hess Corporation, ExxonMobil Companies such as ConocoPhillips, Chevron, Schlumberger, EOG resources and pioneer natural resources are among them.
Since this year, the international oil price has risen to a high level since 2014. In addition to controlling capital investment, Bloomberg quoted Deloitte's analysis data to show that the free cash flow of American shale oil companies will reach US $172 billion in 2022. Back in 2020, the annual cash flow of these oil companies was a net loss of $300 billion, forming the largest loss in the 15 years since the shale oil boom in the United States. This year, these American shale oil companies did not increase capital investment as in the previous upward oil price cycle, but used the vast majority of cash to repay the shareholders of oil companies by raising dividends, distributing special dividends and repurchasing shares.
Us shale oil producers plan to continue to adhere to capital control discipline and implement moderate production growth. At the quarterly earnings conference call of oil companies on Monday, this idea has been fully demonstrated in the speeches of executives of most listed oil companies. Many oil companies believe that the current supply chain, social inflation and labor constraints lead to less optimistic U.S. oil production than predicted by the U.S. Energy Information Administration (EIA) and some analysts. Of course, these shale oil producers have been cautious about the Biden administration's negative evaluation of the oil industry, but they are cautious about the policies and requirements of increasing domestic oil production in the United States in the short term. Such an attitude will undermine the attention of oil producers and reduce their willingness to invest in the medium term.