The giant Groningen gas field…
The total number of active…
Marathon Oil slashed on Wednesday its 2020 capital spending budget for a second time in one month and announced frac holidays in the Bakken and Eagle Ford amid extremely weak commodity prices and demand.
Marathon Oil’s latest updated 2020 capital expenditure (capex) is $1.3 billion, or $1.1 billion lower than its initial spending guidance for this year of $2.4 billion. This year’s capital spending is now expected to be 50 percent lower than the actual spend in 2019, Marathon Oil said on Wednesday, in its second capex cut in a month since the oil prices collapsed in early March.
Last month, after the OPEC+ deal collapse and the start of the Saudi-Russian oil price war, Marathon Oil announced an immediate capex reduction of at least $500 million, “in light of the dramatic fall in commodity prices.”
Today, Marathon Oil announced a second capex cut, with Marathon Oil Chairman, President, and CEO Lee Tillman saying:
“In light of extreme commodity price weakness and anticipated ongoing demand impacts, we have dramatically reduced activity in REx, Oklahoma and the Northern Delaware, and plan to take frac holidays in both the Bakken and Eagle Ford during second quarter. We're maintaining our returns-first mindset with a focus on preserving value through the cycle.”
“Against a highly volatile and uncertain environment, these decisive actions are designed first and foremost to protect our balance sheet and our hard earned financial strength. We remain investment grade at all primary rating agencies, with recent reviews by both Fitch and S&P, and maintain a strong liquidity position with no near-term debt maturities. Our financial strength, high quality portfolio, and ongoing focus on reducing our cost structure position us well to navigate this extraordinary time for our industry,” Tillman said.
Since the oil price crash a month ago, U.S. oil producers, including supermajors Exxon and Chevron, have been rushing to cut budgets and exposure to the most prolific shale basin in the United States, the Permian.
As at the end of March, 22 independent U.S. producers had cut 2020 investment by a total of $20 billion, an average of 35 percent, and three by 50 percent or more, Simon Flowers, Chairman and Chief Analyst at Wood Mackenzie, said last week.
“The size of cuts is close to those of 2015 and have come through faster. Yet companies today are far leaner than back then; and what we’ve seen so far may just be a taste of what’s to come. Diamondback and Occidental have already cut twice in two weeks, suggesting further, deeper cuts are coming for many US Independents,’’ Flowers said.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.