More operators are reacting to commodity price downturn and industry current conditions by reducing 2020 capital spending in Permian Basin. They include:
Apache reduced its 2020 capital budget to about $1.1 billion – down from about $1.75 billion – and will idle all its rigs in Permian Basin and reduce drilling elsewhere. “We are significantly reducing our planned rig count and well completions for the remainder of the year,” CEO John Christmann IV said, “and our capital spending plan will remain flexible based on market conditions.”
Concho Resources of Midland said this week it is reducing its 2020 capital program by about 25 percent to about $2 billion. Tim Leach, chairman and CEO, said Tuesday the company will “provide a detailed update to the operational and financial outlook in its first quarter 2020 earnings materials.” Earlier Concho said 2020 activity was expected to result in 300 to 320 well completions and a 10-to-12 percent increase in oil production.
Devon Energy cut about $500 million from its 2020 capital spending budget of about $1.8 billion. The reductions will be spread across the company’s portfolio so Devon can focus development activity in Delaware Basin and Eagle Ford.
Diamondback Energy of Midland is reducing activity to six completion crews from nine and dropping two drilling rigs in April and another in 2020Q2. Diamondback, fourth most active driller in Texas in 2019 as ranked by drilling permits, said March 9 the reduced activity is expected to lower 2020 oil production. Earlier Diamondback said total net production for 2020 was 310,000 to 325,000 boed with a previous 2020 capital budget of $2.8 billion to $3.0 billion.
EOG Resources said this week it will reduce its 2020 capital plan by 31 percent to $4.3 billion to $4.7 billion with flat growth rate for crude oil production. The revised plan “generates strong returns at $30 oil.” EOG said it will reduce activity across its operating areas and “focus its drilling operations in Delaware Basin and Eagle Ford and continue funding projects that support the long-term value of the company, including targeted infrastructure, exploration and environmental projects.” William R. (Bill) Thomas, chairman and CEO, added, “Our business is more resilient today than it has ever been.” EOG was second most active driller in Texas in 2019 behind Exxon Mobil. Houston Chronicle called EOG “one of the most efficient shale drillers in the U.S.”
Matador Resources will move to 3 operated rigs in Delaware Basin from 6 before June 30 and suspend development activities in Wolf asset of Loving County by end of 2020Q1. Two rigs will operate full-time in Stateline asset in Eddy County, N.M. Oil & Gas Journal said Matador also will reduce unit operating costs, pursue divestitures of non-core assets in Eagle Ford, Haynesville and Delaware Basin, and reduce management compensation.
Noble Energy reduced its capital budget to about $1.2 billion – down from about $1.7 billion. About 80 percent of the capital reduction will occur in U.S. onshore business, including more than half of the reductions in Delaware Basin.
Parsley Energy of Austin, one of the top 20 drilling companies in Texas, said March 9 it plans to reduce drilling rigs from 15 to 12 and reduce hydraulic fracturing crews from 5 to 3. Permian Basin operator Parsley said its baseline budget assumption is $30 to $35 for WTI oil for the remainder of 2020.
Pioneer Natural Resources of Irving said this week it will cut 45 percent from its 2020 capital budget and spend $1.7 billion to $1.9 billion. Active in Permian and Eagle Ford, Pioneer plans to cut drilling rigs in half from 22 to 11 in the next two months. Pioneer was fifth most active driller in Texas last year with 380 permits.
Ring Energy of Midland said March 10 it will cease drilling until commodity prices stabilize. Kelly Hoffman, CEO, said, “No further new drilling will take place until we are comfortable that commodity pricing has stabilized.” Ring will continue to spend on infrastructure upgrades necessary to maintain current production, according to the Oil & Gas Journal, and the company is in discussions on the marketing of its Delaware Basin asset. Last month Ring said it expected to spend $85 million to $90 million for capital expenses in 2020, including drilling 18 new horizontal wells on northwest shelf in Permian Basin.