Big oil companies remain cautious about investments as they seek to pay down debt and respond to shareholders. In contrast, smaller shale operators are ramping up investments, focusing on production volume. While many larger companies fear that oil prices could fall again due to actions of the Organization of the Petroleum Exporting Countries, shale drillers are more secure that they can adjust to price declines. In addition, shale producers’ smaller-scale projects require less capital than major firms’ projects. Independent producers in the US plan to increase spending by more than 25%, given that oil prices remain over $50 per barrel, according to Wood Mackenzie. For major oil firms, Wood Mackenzie forecasts investments to decline 8% in 2017. Nonetheless, shale companies still face challenges to operating profitably. AlixPartners forecasts oil producers of all sizes will outspend their cash flow by $43 billion in 2017.

Source: Wall Street Journal