Global oil, gas producers cut spending after crude price crash

0
258

LONDON Oil and gas companies are cutting spending plans in response to the new coronavirus and a push by Saudi Arabia and Russia to ramp up output. International benchmark prices LCOc1 have more than halved since the start of the year, falling to around $25 a barrel. North American oil and gas producers have cut capital spending by about 30% on average, data compiled by Reuters showed. Below are plans announced by top energy companies (in alphabetical order): Norwegian Aker BP will postpone non-sanctioned projects to cut its planned 2020 capital and exploration spending by 20% due to the coronavirus but maintains its production guidance. Capital spending for this year would be reduced to $1.2 billion and exploration spending to $400 million, while in 2021-2022 it expects capital spending to be “well below” $1 billion. The company said its ambition to continue paying dividends “remained firm”, but the board still had to assess the situation. BPBP Plc said it planned to reduce capital and operational spending, which was about $15 billion last year. Chevron Corp said it aimed to trim spending and lower oil output in the near term. The oil major’s 2020 organic capital expenditure guidance had been $20 billion. Norway’s DNO, which operates in Iraq’s Kurdistan region, said it would cut its 2020 budget by 30% or $300 million and lower its dividend for the first half of the year. Mediterranean gas group Energean said it would cut its investments by $155 million in Greece and Israel and could reduce its budget for Egypt by another $140 million if needed without endangering delivery of its long-term offtake deals. Eni followed rivals by cancelling a share buyback and sharply cutting investments. It said it would withdraw plans it had to buy back 400 million euros ($433.84 million) of shares this year, adding it would reconsider a buyback when Brent was at least $60 per barrel. North Sea producer EnQuest aims to break even this year at $38 a barrel and does not expect to restart its Heather and Thistle/Deveron fields, which produced 6,000 barrels of oil equivalent per day (boepd) last year. It is cutting operating costs by 30% to $375 million and investment will be lowered by $80 million to $150 million, which is expected to reduce output next year. Norway’s Equinor (EQNR.OL) has suspended its ongoing $5 billion share buyback program and said it would cut total 2020 spending by around $3 billion, including capital spending reduction to $8.5 billion from previous plans of $10-11 billion, with drilling and completion activities being postponed in the U.S. onshore. ExxonMobil Corp (XOM.N) said it would make significant cuts to spending. It had previously budgeted $30 billion to $33 billion for projects in 2020. Genel Energy Plc (GENL.L), which operates in Iraq’s Kurdistan region, said it could generate excess cash at a sustained oil price of $40 a barrel, would be resilient with an oil price of $30 a barrel and will continue to pay a dividend of $0.10 a share. It said it could reduce investments to $60 million this year, but expected the number to be $100 million, below previous guidance of $160-$200 million. Its production costs are $3 a barrel.—Reuters

LEAVE A REPLY

Please enter your comment!
Please enter your name here