Midland Reporter-Telegram – Two more Houston energy companies slashed spending and dividends Thursday after oil prices crashed earlier this week.
Apache Corp. and Noble Energy each cut about a third of their planned capital spending, about $650 million and $550 million, respectively, from their budgets used to fund oil exploration and production. Apache also cut its quarterly dividend by 90 percent to 2.5 cents per share, down from 25 cents.
“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,” Apache Chief Executive John Christmann IV said in a statement.
Apache and Noble are the latest U.S. oil and gas producers to slash spending after Monday’s historic oil crash, which saw the price of the U.S. benchmark plunge 25 percent, or more than $10, to settle at $31.13 per barrel.
Occidental Petroleum and Marathon Oil, both based in Houston, and Devon Energy, based in Oklahoma City, as well as Chevron have cut about a third of their planned capital spending, slashing about $1.7 billion, $500 million and $500 million respectively. West Texas producers Diamondback Energy and Parsley Energy also said they are idling oil rigs and laying off fracking crews.
Apache reduced its 2020 capital budget to about $1.1 billion, down from around $1.75 billion. The company will idle all of its rigs in the Permian Basin of West Texas, and reduce its drilling activity in Egypt and the North Sea. It expects to save $340 million in cash by reducing its dividend.
Noble reduced its capital budget to about $1.2 billion, down from around $1.7 billion. More than half of its cuts will take place in the Delaware Basin in West Texas and New Mexico. About $100 million of the reduction will come from deferring oil exploration and non-critical projects.
“Deferring activity until commodity prices recover protects our investment returns, maintains free cash flow and strengthens the balance sheet,” Chief Executive David Stover said in a statement.
Monday’s price collapse was the biggest one-day decline since the first Gulf War in January 1991. It came as Russia and Saudi Arabia said they would flood the market with cheap crude despite weakening demand caused by the novel coronavirus.
West Texas Intermediate crude prices ended Thursday down 4.5 percent to $31.50 per barrel.