US, WASHINGTON (ORDO NEWS) — In March, the oil market was in a difficult situation: OPEC + on March 6 could not agree on a deal to reduce oil production, which led to a sharp drop in commodity prices. So, Brent crude oil has fallen in price almost twice: from almost $ 50 per barrel at the beginning of the month it dropped to $ 25, this is the minimum value since 2003.
Oil prices are forcing the most vulnerable oil companies to revise investment plans, rapidly cutting costs.
Below we will talk about oil companies that have decided to cut costs due to falling oil prices.
1. EOG Resources
Texas-based oil company EOG Resources has announced a $ 2 billion, or 31%, reduction in capital spending in 2020. Two factors influenced the company’s decision at once: the spread of coronavirus and the price war on the part of Saudi Arabia, which affects American companies.
EOG said that the company intends to reduce costs in all areas of activity. The company will focus on drilling in western Texas and New Mexico, as well as the Eagle Ford Shale field in South Texas.
The company currently plans to spend $ 4.3-4.7 billion on capital expenditures in 2020. According to company forecasts, production in 2020 will amount to 446-466 thousand barrels of oil per day.
2. Pioneer Natural Resources
This is another Texas-based company that is cutting its budget for 2020. The reduction will be about 45%, which is also associated with a drop in oil prices and the general atmosphere of uncertainty in the macroeconomy.
After cutting costs, the company’s budget for 2020 will be $ 1.6-1.8 billion, compared with $ 3.0-3.3 billion, as previously planned.
In particular, the company plans to reduce spending on water infrastructure to almost $ 100 million compared with the $ 125 million that had been planned earlier.
3. Saudi Aramco
The Saudi company Saudi Aramco is also cutting costs amid a price war waged by Saudi Arabia itself.
Capital expenditures will range from $ 25 billion to $ 30 billion in 2020, compared with $ 35-40 billion as previously planned. In addition, the company is reviewing its plans for next year.
The price war unleashed by Saudi Arabia forces the company to increase supplies of raw materials, despite the fall in oil prices.
4. Occidental Petroleum
US-based Occidental Petroleum is also cutting costs. First of all, the company announced a reduction in quarterly payments to investors for the first time in 30 years. This decision was also made against the backdrop of falling oil prices.
The company, located in Texas Houston, also reduced dividends to shareholders to 11 cents from 79 cents. In addition, the company reduces capital expenditures in 2020 by almost a third – from $ 5.2-5.4 billion to $ 3.5-3.7 billion.
5. Exxon Mobil
On Monday, Exxon Mobil also announced plans to significantly reduce costs amid falling oil prices, as well as in connection with the coronavirus epidemic.
Shares in the company hit a 17-year low. Exxon shares fell to $ 34.49 on Monday. This is the last time stock prices have been reached in 2003.
6. Marathon Oil
Marathon Oil Corp, an American company, said Tuesday that it plans to cut drilling and costs by at least 30% from its previously planned level. Shares of Marathon Oil on Monday fell 47%, but then rose 32%.
Norwegian oil company Equinor is reviewing its capital and operating expenses amid falling oil prices and the coronavirus epidemic.
In February, the company planned capital expenditures of $ 10–11 billion in 2020 and 2021. In the years 2022-2023, the company plans to raise costs to $ 12 billion, which will increase costs and invest in renewable energy projects.
The company announced that it is planned to reduce “non-critical” activity on the shelf.
The Italian company Eni also followed the example of its competitors and announced cost reductions as a result of falling oil prices, as well as against the backdrop of the coronavirus epidemic, which had a significant impact on the economic situation in Italy.
The head of the company, Vagit Alekperov, announced that LUKOIL plans to reduce investment and operating costs. According to him, the total cost reduction amounted to $ 1.5 billion. At the same time, Alekperov stressed that these reductions do not apply to projects related to the provision of geological exploration and oil production.
Chevron is another company that has announced spending cuts in the short term amid falling oil prices.
This American company was the first company to confirm revaluation of costs amid falling prices.
The company said that it was about reducing capital costs in the short term, but the company plans to maintain revenue in the long term.
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The article is written and prepared by our foreign editors from different countries around the world – material edited and published by Ordo News staff in our US newsroom press.