Dividends from Drillers Remain High Even as Cash Flows Sink Lower

Investors grew tired of putting money into oil and gas companies during the go-go early years of the shale era from the early 2000s until the early 2020s because O&G companies didn't pay dividends, and their stock prices plunged in value, in some cases, 90% or more. Drillers got the message, and beginning around four years ago, there was a conversion to a new religion --- the religion of free cash flow, dividends, and stock buy-backs. Shareholder returns soared to a peak of over 10% in 2022. But since then, prices (at least for natural gas) have tanked, and along with it, shareholder returns. However, O&G companies are still giving respectable (more than any other sector) returns to shareholders, even amid low commodity prices for oil and gas. Of the three sub-groups in O&G (oil-focused, diversified, and gas-focused), the gas group, of which most M-U drillers belong, is doing the worst with returns to shareholders.

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