- Nov 4, 2021 10:40 pm GMT
Investors either exiting the sector or demanding greater capital discipline and lower reinvestment rates, these producers need a long-term strategy that ensures enough outside capital to fight the headwinds of increasing environment, social, and governance (ESG) imperatives
- Landscape is shifting toward fewer, larger companies, affording greater flexibility with scale.
- Trend across the peer group of increasing free cash flow helps companies build credibility with creditors and equity investors.
- US Independents has 30 key producers generating US$688 billion in free cash flow from 2021 to 2030
- Healthy balance sheets and increased dividends are likely to attract new investors that can help companies accelerate their ESG efforts.
- To meet increasing investor and shareholder demands on commitments to ESG, they need to show stakeholders and potential investors that they have a long-term strategic plan for decarbonization, lower emissions, and more sustainable operations.
- Independents strategy is one of “disciplined growth,” wherein they scaled back development on new acreage.
Business models that support self-funding limit the need for new equity capital, buying time to restore confidence from investors and attracting more capital by deploying their own capital.
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