Another quarter, another gusher of red ink.

Despite investors’ growing demands that oil and gas companies rein in spending, the North American fracking sector once again spent more on drilling than it realized from selling oil and gas.

A cross-section of 29 fracking-focused oil and gas companies reported more than $2.5 billion in negative free cash flows in the first quarter of 2019. These results were even worse than in the fourth quarter of 2018, when the same group of fracking-focused enterprises notched $2.1 billion in negative cash flows.

READ MORE: The Fracking Depreciation Dodge

This dismal cash flow performance came despite a 16 percent quarter-over-quarter decline in capital expenditures. But operating cash flows fell even faster, widening the industry’s cash flow gap.

Free cash flow is a crucial gauge of financial health. Positive free cash flows allow companies to pay down debt and reward equity investors. In contrast, negative free cash flows force companies to fund their operations by dipping into cash reserves, selling assets, or raising new money from capital markets.

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Some of our key findings:

US fracking-focused oil and gas companies continued their decade-long losing streak through the first quarter of 2019.

A cross-section of small and mid-sized US E&Ps reported $2.5 billion in negative cash flows from January through March 2019.

Negative cash flows have soured investors on the sector, constraining the oil and gas industry’s ability to tap debt and equity markets

Full research brief: “Red Ink Keeps Flowing for U.S. Fracking Sector”

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This commentary was published in affiliation with the Institute for Energy Economics and Financial Analysis. Tom Sanzillo is IEEFA’s director of finance, and Kathy Hipple is an IEEFA financial analyst. The authors gratefully acknowledge the invaluable assistance of John Abbotts in

compiling and organizing data for this report.

Clark Williams-Derry is the director of energy finance at Sightline. He focuses on US and global and energy markets and his recent research covers the financial and fiscal implications of “self-bonding” for coal mine reclamation; the financial viability of West Coast coal export projects; Pacific Rim coal market dynamics; greenhouse gas accounting for coal export projects; issues emerging from coal industry bankruptcies; and the interactions between federal coal leasing policy and coal exports. To contact or for media requests, contact Sightline Communications Manager Anne Christnovich.