Global oil, gas producers cut spending after crude price crash

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 have more than halved since the start of the year, falling to around US$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:

AKER BP

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 US$1.2 bil and exploration spending to US$400 mil, while in 2021-2022 it expects capital spending to be “well below” US$1 bil. 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 US$15 bil last year.

CHEVRON

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 US$20 bil.

DNO

Norway’s DNO, which operates in Iraq’s Kurdistan region, said it would cut its 2020 budget by 30% orUS300 mil and lower its dividend for the first half of the year.

ENERGEAN

Mediterranean gas group Energean said it would cut its investments by US$155 mil in Greece and Israel and could reduce its budget for Egypt by another US$140 mil if needed without endangering delivery of its long-term offtake deals.

ENI

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 (US$433.84 mil of shares this year, adding it would reconsider a buyback when Brent was at least $60 per barrel.

ENQUEST

North Sea producer EnQuest aims to break even this year at US$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 US$375 mil and investment will be lowered by US$80 mil to US$150 mil, which is expected to reduce output next year.

EQUINOR

Norway’s Equinor has suspended its ongoing US$5 bil share buyback programme and said it would cut total 2020 spending by around US$3 bil, including capital spending reduction to US$8.5 bil from previous plans of US$10-11 bil, with drilling and completion activities being postponed in the US onshore.

EXXONMOBIL

ExxonMobil Corp said it would make significant cuts to spending. It had previously budgeted US$30 bil to US$33 bil for projects in 2020.

GENEL

Genel Energy Plc, which operates in Iraq’s Kurdistan region, said it could generate excess cash at a sustained oil price of US$40 a barrel, would be resilient with an oil price of US$30 a barrel and will continue to pay a dividend of US$0.10 a share.

It said it could reduce investments to US$60 million this year, but expected the number to be $100 million, below previous guidance of US$160-US$200 mil. Its production costs are US$3 a barrel.

It has yet to receive payments from local authorities for production in October and November.

GULF KEYSTONE

Kurdistan-focused producer Gulf Keystone suspended some of its drilling activities in the northern Iraqi region.

KOSMOS ENERGY

Kosmos Energy Ltd has suspended its dividend and said it aimed to reduce 2020 capital spending by 30% with a view to becoming cash-flow neutral with an oil price of US$35.

LUNDIN PETROLEUM

OIL SEARCH

Papua New Guinea-focused Oil Search Ltd cut its 2020 investment by 38% and capital spending by 44%.

PREMIER OIL

Premier Oil Plc said it had identified at least US$100 mil in potential savings on its 2020 capital spending plans.

Premier expects to be broadly cash-flow neutral in 2020, assuming a US$100 mil reduction in planned 2020 capital spending and a US$35 oil price for the rest of the year.

SANTOS

Santos Ltd, Australia’s No 2 independent gas producer, said it was reviewing all its capital spending plans and would stop all hiring.

SAUDI ARAMCO

Saudi Arabia’s state-run oil company Saudi Aramco 2222.SE said it planned to cut capital spending for 2020 to between US$25 bil and US$30 bil, compared with US$32.8 bil in 2019.

ROYAL DUTCH SHELL

Shell lowered capital expenditure for 2020 by about US$5 bil on Monday and suspended the next tranche of its share buyback plan, as the company tries to weather a hit from the recent oil price crash.

TOTAL

Total said that with prices of US$30 per barrel, it would now target organic capital expenditure cuts of more than US$3 bil, mainly in exploration. The company will also target US$800 mil in 2020 operating cost savings compared to 2019, instead of the US$300 mil previously announced, and suspend its outstanding US$1.5 bil share buyback programme.

TULLOW OIL

Tullow Oil Plc said it would cut its investment budget by about a third to US$350 mil this year and reduce exploration spending, historically the group’s focus, by almost half to US$75 mil.

It said the oil price fall might jeopardize a plan to sell US$1 bil in assets to refill its coffers, raising the risk the group’s lenders could become reluctant to approve loans essential to shoring up its future.

WINTERSHALL

Wintershall Dea said it would cut 2020 investment by a fifth to 1.2 billion to 1.5 billion euros (US$1.3 bil to US$1.7 bil) and suspend its dividend until further notice.- March 25, 2020, Reuters

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