In response to the current oil price environment, many operators have reported reductions in their 2020 capital spending plans.
Apache Corp. has reduced its 2020 capital investment plan to $1-$1.2 billion from a previous range of $1.6-$1.9 billion. Activity reductions are planned in Egypt and the North Sea. In Suriname, upon the conclusion of operations at the Sapakara West-1 exploration well, the company will proceed, as planned, to a third exploration prospect.
“We are significantly reducing our planned rig count and well completions for the remainder of the year, and our capital spending plan will remain flexible based on market conditions,” said John J. Christmann IV, Apache’s CEO and president. “We are also further reducing operating and overhead costs as we continue to implement our corporate redesign program, which began in the fall of 2019.”
Murphy Oil Corp.’s revised 2020 budget is about $950 million. The reduction of about $500 million equates to a nearly 35percent revision from the midpoint of its previous budget of $1.4-$1.5 billion.
“Under current conditions, we believe this capital reduction program allows for financial flexibility and preservation of our longstanding dividend,” said Roger W. Jenkins, Murphy’s President and CEO.
Under the revised plan, the company is delaying certain US Gulf of Mexico projects and development wells, and postponing spud timing of two operated exploration wells.
Talos Energy has reduced its 2020 guidance by more than $125 million from the original budget of $520-$545 million. The company said that, following these changes, it will be able to generate positive free cash flow in 2020 with average WTI prices of $30.00/bbl or more, inclusive of its existing hedge position.
Timothy S. Duncan, President and CEO of Talos, said: “In order to be prepared for these situations, we always strive to maintain a conservative leverage position, high liquidity and a strong hedge book. We believe we are well-positioned to safely navigate current market conditions.”
Occidental Petroleum Corp. has reduced its capital spending to $3.5-$3.7 billion from $5.2-$5.4 billion and will implement additional operating and corporate cost reductions.
“Due to the sharp decline in global commodity prices, we are taking actions that will strengthen our balance sheet and continue to reduce debt,” said Vicki Hollub, Occidental’s President and CEO. “These actions lower our cash flow breakeven level to the low $30s WTI, excluding the benefit of our hedges, positioning us to succeed in a low commodity price environment.”