The rising hurdles for investment in upstream
How will the oil and gas industry spend its new-found cash flow? Early Q1 company results confirm our prediction that 2021 could prove to be a record year for free cash flow. All the indications are that companies are still fixating on capital discipline, using any surplus cash to pay down debt or buy back shares.
If and when the mood changes, there’s a sizeable pool of investment options in conventional oil and gas. But to progress in the current environment, these projects will have to meet both tough economic hurdle rates and increasing scrutiny against emissions reduction targets. Rob Morris, Principal Analyst Upstream Research team, shared his thoughts on the prospects for FIDs.