US shale producers have made their first ever quarterly cash surplus according to an analysis which highlights the strength of a sector that is an important source of business for Scottish engineering majors.

However, the findings may spark concern among North Sea oil and gas industry players amid uncertainty about the outlook for crude prices and intense global competition for capital.

Read more: Oil price warning bodes ill for North Sea

The Rystad energy consultancy found US firms focused on shale fields achieved positive total cash flow of around $110 million after operating costs and spending on new assets in the three months to June.

The consultancy said the figures reflected a remarkable turnaround for the industry.

Cash outflows exceeded receipts in preceding quarters leaving firms reliant on bond funding to finance their activities.

Based on a study of 40 firms, the analysis highlights the impact of the rise in oil prices seen earlier this year combined with a focus on costs among shale producers.

Read more: Weir shares tumble as US shale orders slide

Rystad senior analyst Alisa Lukash noted. “The five dollar increase in the average WTI (West Texas Intermediate) oil price from the first to the second quarter of 2019, coupled with operators’ efforts to keep spending within their initial budgets.”

Both factors helped boost the profitability of firms operating onshore shale fields in the US, in which costs are much lower than for companies running production businesses offshore.

The improvement in the cash position should allow firms to increase activity in a way that could generate more work for services firms that help them develop and operate fields.

Rystad said the top 40 US shale producers increased spending on wells by three per cent in total in the latest quarter while the number of wells they completed rose 7%.

“As strong fracking has already been confirmed for the second half of the year, we do expect robust completion activity to persist in the third quarter before slowing down in the final quarter, “ said Ms Lukash.

Read more: Aberdeen oil services heavyweight expands in US shale market

The prospect of strong activity will be welcomed by a range of Scots engineering giants that have capitalized on booming shale production in recent years.

Glasgow-based engineering giant Weir Group has become a leading supplier of the pumps used in the hydraulic fracturing (fracking) process on shale fields. This involves involves pumping sand, water and chemicals into rocks under pressure to release oil and gas.

Weir suffered a drop in first half orders in the US which it said reflected over-capacity in the pressure pumping market. It predicted this would be worked through and said the long-term prospects for US shale remained strong.

Shares in Weir rose 2% yesterday, closing up 24.5p at 1319p.

Aberdeen-based Wood has built a big position in the US shale market through acquisitions.

On Tuesday its chief executive Robin Watson said: “Our US shale business goes from strength to strength.”

Centurion Group, which is also-based in Aberdeen, showed belief in the outlook for the US shale market in May when it bought the Texas-based valves specialist Totalfrac.

But further growth in US shale activity could be bad news for the North Sea oil and gas industry.

Read more: North Sea upheaval set to continue as US giant mulls sale of $2bn portfolio

Increased shale output has put pressure on crude prices in recent months, amid concern about the outlook for growth around the world.

Oil prices rose in the first quarter following moves by exporters led by Saudi Arabia to curb production to support the market.

However, the Brent crude price has fallen from $75 per barrel in April to around $60/bbl.

With low operating costs shale producers can achieve break even at relatively low crude prices.

In recent months America’s Chevron and ConocoPhillips have sold big North Sea portfolios to focus investment on US shale fields.