ConocoPhillips cuts capital spending for 2020 for the second time in a month and cuts part of its production in Canada and the United States until market conditions improve, oil producer said on Thursday. gas, joining other US companies that have already cut their spending budgets twice since. the collapse in oil prices in early March.
ConocoPhillips announced further reductions in investment of US $ 1.6 billion, bringing the current estimate to US $ 4.3 billion. Including the first investment reduction of US $ 700 million announced in March, ConocoPhillips is reducing its initial investment forecast for 2020 by approximately 35%. These spending reductions will be mainly concentrated in the Lower 48, Alaska and Canada, where the company has the highest levels of flexibility, she announced Thursday.
ConocoPhillips is also voluntarily reducing 200,000 barrels of oil equivalent per day (boe / d) net to the company until market conditions improve. At Surmont in Canada, ConocoPhillips is currently cutting production due to low prices from Western Canada Select (WCS), which were less than US $ 5 per barrel on Thursday. By May, the firm plans to cut production from about 100,000 barrels of crude oil per day to 35,000 bpd gross. ConocoPhillips will also begin cutting production across all of its Lower 48 operations in May.
“Limitation decisions will be made on a monthly basis and are subject to operating agreements and contractual obligations,” said the company, adding that it had also suspended its share buyback program. Related: Texas Oil Drillers Cannot Agree On Production Reductions
ConocoPhillips is not the first American producer to cut expenses twice in a month. Last week, Marathon Oil cut its 2020 capital spending budget for the second time in a month and announced a big vacation in the Bakken and Eagle Ford amid extremely low commodity prices and demand.
Speaking of cutting American corporate investment spending, Simon Flowers, president and chief analyst at Wood Mackenzie, said in late March:
“The size of the cups is close to that of 2015 and has accelerated. Yet today’s businesses are much leaner than they were then; and what we’ve seen so far may be just a taste of what’s going to happen. Diamondback and Occidental have already cut twice in two weeks, suggesting that new, deeper cuts are happening for many American independents. “
By Tsvetana Paraskova for Oilprice.com
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