Noble Energy Inc. said May 8 it would curtail oil production by at least 40,000 barrels per day (bbl/d) in May and June and further cut its capital spending to cope with a plunge in oil prices, amid reduced demand and oversupply due to the COVID-19 pandemic.
Stay-at-home orders designed to contain the spread of the coronavirus have forced businesses to shut down, cutting worldwide demand for oil and creating a supply glut. U.S. crude collapsed this year, and is down about 60% from January despite a recent rally.
Noble said it will curtail 5,000 bbl/d to 10,000 bbl/d in May and 30,000 bbl/d to 40,000 bbl/d in June from the company’s U.S. onshore assets.
North American oil companies are on course to cut roughly 1.7 million barrels per day by the end of June, according to a Reuters analysis of U.S. state and company data.
The company took about $4 billion in charges from assets and leasehold impairments due to the fall in commodity price.
Noble also said it would further cut its capital spending by $50 million, bringing the total reduction to 53% from the midpoint of its original budget of $1.6 billion to $1.8 billion.
Shares of the company were up 5% at $9.33 in premarket trading after it beat estimates on the back of higher crude oil sales.
On an adjusted basis, the company posted a profit of 18 cents per share, higher than analysts’ estimate of 3 cents per share, according to Refinitiv IBES.
Total sales volume rose around 16% to 390,000 barrels of oil equivalent per day from last year.
The Houston-based oil and gas producer’s net loss attributable to the company was $3.96 billion, or $8.27 per share, for the first quarter ended March 31, wider than a loss of $313 million, or 65 cents per share, a year earlier.
The company’s gas production in 2019 was at 29.67 Bcm, a jump of 7.2% from the prior year.
The total consideration of the transaction amounts to R$144.4 million (about US$27 million), according to a news release.
The natural decline rates of existing oil and gas wells across major shale plays in the U.S. will contribute to a tighter supply/demand balance.