Now that President Donald Trump has officially exited the Iran nuclear deal, it’s time for oil markets to refocus attention on other variables that influence prices. As a bona fide – albeit imperfect – swing producer, America’s shale sector merits close attention.
Lost in all the Iran hoopla was the announcement of stellar first-quarter financial results from America’s leading shale producers. Most are now generating significant free-cash flow, meaning incoming revenue exceeds a company’s capital investment, giving them the option of paying down debt or rewarding shareholders with dividends or stock buybacks. This development is a big deal and could be a major inflection point for a sector that in recent years has been criticized for its “cash burn,” most famously by hedge fund manager David Einhorn in 2015.
