In 2016, the shale boom collapsed under its own weight...
The oil and gas (O&G) industry had been operating with a grow-at-all-costs mentality for years. But it wasn't working anymore. Companies that borrowed cheap debt to chase volume had hit their tipping point.
Oil prices plummeted to less than $30 per barrel. Seventy U.S. drillers filed for bankruptcy. Operators slashed their rig counts and cut capital expenditures to the bone.
Service yards across the Permian Basin and Bakken Formation – two of the biggest U.S. oilfields – went silent.
Shareholders needed more than revenue growth. They started demanding companies clean up their balance sheets... or give them their money back.
For the first time in a decade, the U.S. exploration and production industry was forced to make a shift. Someone had to redefine what success looked like.
Enter Ben Dell...
Dell didn't run an oil company. But as a trained geologist, he understood the oil sector from a scientific perspective.
And as managing partner of an investment firm, Kimmeridge Energy Management... he understood the numbers, too.
Dell knew just how to fix O&G's souring relationship with Wall Street. Through Kimmeridge, he took stakes in several major energy companies.
Then he threw out the rule book.
Kimmeridge completely overhauled how these businesses managed money. The firm launched activist campaigns to push for spending cuts on speculative projects.
Instead, it focused on returning cash to shareholders... advocated for consolidation in crowded basins... and led boardroom changes in underperforming firms.
Buybacks and dividends surged across the industry. U.S. shale producers returned more than $36 billion to shareholders in 2021... up from less than $10 billion the previous year.
Kimmeridge made plenty of headlines for its campaigns...
And the ripples spread far beyond its immediate targets.
Dozens of firms adjusted their playbooks to stay competitive in a market that had stopped rewarding volume... and started rewarding results.
It's no secret we're bullish on natural gas. But that doesn't mean all natural gas companies are the same to us.
Some companies will respond to rising demand with more spending and expansive production plans. Others will stick to the plan that has helped energy stocks for the past several years... They'll prioritize profitability and shareholder returns.
This is where we want to put our money.
When it comes to picking natural gas stocks, think like Ben Dell and the folks at Kimmeridge...
Kimmeridge launched its latest activist campaign back in November. The firm is pushing for change at Oklahoma-based oil and gas producer Devon Energy (DVN).
Devon is already following Dell's playbook. It's consolidating – it announced a merger with Coterra Energy (CTRA) earlier this month.
And it's spending more money on investors. After the merger closes, Devon plans to increase its dividend and issue a $5 billion buyback program.
Investors are already rewarding the activist campaign... Shares are up 19% since the announcement.
Kimmeridge had a hand in this particular deal. But plenty of other companies can follow the same playbook without its help.
Look for businesses that are cleaning up their acts like Devon is. That means limiting capital expenditures... and spending more money on dividends and share buybacks.
Those that have already cut project spending and increased dividends should lead the industry, too.
As natural gas demand soars, keep an eye on how the producers respond. Major expansion projects are likely a red flag... while a continued focus on shareholder returns will be rewarded.
Regards,
Rob Spivey
February 27, 2026
