Shale Spending Sinks as Exxon Cuts More Than Double Anyone Else
Shale Spending Sinks as Exxon Cuts More Than Double Anyone Else
(Bloomberg) -- Exxon Mobil Corp. more than doubled the budget cuts announced by any other shale company on Tuesday amid an historic crude-market crash.
In all, nearly three dozen shale explorers have slashed more than $27 billion from their budgets in less than a month. Exxon, alone, said it will cut $10 billion in spending, a 30% reduction.
Oil prices are trading in the $20-a-barrel range as the result of a toxic combination of a killer pandemic and a price war between Saudi Arabia and Russia that’s flooding the world in oil. The spending cutbacks are expected to have a dramatic effect on the U.S. rig count, which is falling by record margins, according to industry consultant Rystad Energy. On Friday, the U.S. rig count fell by 64 to 664.
“The speed of this decline exceeds the initial post-oil-price-crash expectations,” Artem Abramov, head of Rystad’s shale research, said Tuesday in a report. “This downturn is the real test of US Land industry endurance.”
Here’s a summary of how energy companies are responding:
| SECTOR | RESPONSE |
|---|---|
E&Ps | |
| EOG | Cut 2020 capital spending by $2 billion, or 31%, to protect dividend and keep production flat |
| EQT | Reduced high end of 2020 capital expenditure by 6%, boosts free cash flow target |
| Whiting | Filed for chapter 11 bankruptcy despite lowering capital expenditure by 30%, or $185 million |
| Goodrich | Spending down by a third, or $15 million, but expects cash flow increase on gas prices |
| Marathon Oil | Cut 2020 capital spending by at least $500 million as company reduces drilling activity |
| California Resources | Reducing capital investments to level needed to maintain safe operation of facilities |
| Ring Energy | Reevaluating its 2020 capital expenditures, and is ceasing further drilling until prices stabilize |
| Diamondback | Reducing crews working on oil wells by a third, idling three rigs by the third quarter |
| Parsley | Idling 40% of fracking crews, and shrinking the number of rigs under lease by 20% |
| Occidental | Cut dividend by 86% and reduced 2020 spending about 32% |
| Apache | Cut dividend by 90%, reduced Permian rigs to zero, lowering 2020 budget by about 37% |
| Exxon Mobil | Slashing budget by $10 billion, mostly in Permian, for second-biggest cut in its modern history |
| Chevron | Spending reduced for Permian Basin by about half, to $2 billion |
| Matador Resources | Trimmed capital and operating costs, dropping the operated drilling program by half and cutting exec pay. |
| Devon Energy | In two separate rounds, cut capital budget by 45% in 2020, including in Stack and Powder River Basin |
| Murphy Oil | Cut capital expenditures 35% |
| PDC Energy | Capital spending reduced 20%-25%, deferring as many as 15 wells into 2021 and slowing share repurchases |
| Ovintiv | Cuts second quarter capital expenditures $300 million and drops 10 rigs |
| Noble Energy | Reducing 2020 capital spending by about one-third |
| Bonanza Creek Energy | Reducing production and ‘significantly’ cutting development |
| QEP Resources | Cutting 2020, 2021 combined capital spending nearly 30%, suspending quarterly dividend and stopping Permian completions until the fourth quarter |
| Concho Resources | Slashing full-year capital expenditures by around 25% |
| Hess | Reducing capital expenditures by more than 25% by reducing rigs in Bakken to 1 from 6 |
| Kosmos Energy | Suspending dividend, reducing capital budget around 30% and eliminating jobs and cash bonuses |
| Callon | Operational capital plan to be cut by $250 million, lowering operated rig count to 5 from 9 and reducing frack crews to 2 from 5 |
| Pioneer Natural Resources | Drilling, completion and facilities capital budget reduced 45%, and cutting its operating rig count in half to 11 |
| W&T Offshore | Cut capital spending as much as 75% |
| Abraxas | Eliminated jobs, reducing salaries and will not drill or complete any wells as long as oil prices remain low |
| Range Resources | Cutting capital spending by 17% to $430 million |
| Berry | Slashed 2020 spending in half to $65 million |
| Continental | Reducing production by 30% for April and May and suspending dividend |
| Centennial | Chopped its 2020 capex plan by half from the $590M-$690M guidance range given in February |
Pipeline Companies | |
| Oneok | Cut low end of 2020 capital expenditures guidance around 30% |
| Noble Midstream | Cut capital expenditures guidance 35% |
| EnLink Midstream | Cut its capital expenditure guidance 30% |
| Plains All American | Reducing 2020/2021 capital program by $750 million or 33% |
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