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The oil price crash has forced producers in Colorado to slash their capital expenditure, suspend completion activities, and release rig crews, leaving just six operating rigs in the state as of May 29 - the lowest number of rigs in at least 28 years.
Lower liquidity and constrained access capital could make life for the companies operating in Colorado’s oil patch much more difficult, analysts and industry executives told Mark Jaffe of The Colorado Sun.
Due to the price collapse in early March, oil producers in the state - from Occidental Petroleum to the smaller firms - have slashed capital expenditure for Colorado operations by at least half, and many have suspended completion activities until at least the fourth quarter or until oil prices improve.
The rig count in Colorado as of May 29 numbered just six rigs, down from 31 operating rigs at the same time last year, according to data from Baker Hughes. The six rigs in Colorado last week were the fewest rigs in the state in 28 the years since Baker Hughes started reporting rig counts by state, according to The Colorado Sun.
Occidental Petroleum, which became the state’s top oil producer after it bought Anadarko last year, has slashed its capital expenditure for the Rockies to US$300 million from US$900 million, The Colorado Sun reports.
Related: Saudi Arabia Could Set Trend For Higher Oil Prices In June
Noble Energy has suspended all completion activity, and drilling activity has been reduced to one rig in the Denver-Julesburg (DJ) Basin, the company’s President and Chief Operating Officer Brent Smolik said on the Q1 earnings call. Noble Energy plans capex of US$75 million to US$100 million for the option to complete DJ wells in the fourth quarter.
PDC Energy, based in Denver, plans capex of US$500 million-US$600 million this year, down by around 50 percent compared to its initial 2020 guidance from February 2020. The company will have one operating rig in Wattenberg and no frac fleets planned until the fourth quarter, president and CEO Barton Brookman, Jr. said on the Q1 earnings call.
“This is the slowest capital pace for the company in many, many years,” Brookman Jr. noted.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.