Occidental Petroleum Corp. and Devon Energy Corp. posted bigger quarterly losses on May 5 as both oil producers reported billion-dollar impairment charges and plan to deepen cuts for the third time since March in response to the historic crash of oil prices.
Occidental Petroleum on May 5 reported that it swung to a loss in the first quarter on write-downs, and plans to cut its budget.
The troubled oil producer reported a net loss of $2.23 billion, or $2.49 per share, for the quarter ended March 31, compared with a profit of $631 million, or 84 cents per share, in the year-ago period.
Occidental beat Wall Street estimates for adjusted earnings. Analysts expected an adjusted loss of 63 cents, but the company reported a loss of 52 cents, according to Refinitiv.
The company is "taking aggressive action to ensure our long-term financial stability," CEO Vicki Hollub said.
Write-downs of $1.4 billion in pipeline assets, losses on interest rate swaps and impairments on oil and gas properties were partially offset by a $1 billion gain on crude oil hedges.
Occidental has been struggling with debt taken on in last year's ill-timed acquisition of Anadarko Petroleum, a bet on rising shale oil prices months ahead of the worst price crash in decades.
The purchase saddled Occidental with $40 billion in debt and the oil-price crash has cut the value of assets that Occidental picked up in the deal, dashing its hopes of selling them to pay down the debt.
Occidental cut its capex for the year to between $2.4 billion and $2.6 billion after earlier downsizing it to between $2.7 billion and $2.9 billion, nearly half the original forecast.
It has identified additional $1.2 billion in operating and overhead cost cuts for 2020, the company said May 5.
Occidental shares closed at $15.32 on May 5, down 1.3% and are down 64% this year.
Devon Energy posted a bigger quarterly loss on May 5 as it took an asset write down of $2.8 billion and said it expects to cut 10,000 bbl/d in the second quarter as oil prices crater.
The company also cut its 2020 production forecast to between 300,000 to 319,000 boe/d from 328,000 to 339,000 boe/d.
The Oklahoma-based company, which has been selling its assets to become a pure-play U.S. oil producer, has cut its annual budget twice in March.
With the oil prices at their lowest in decades due to weak demand as well as a supply glut, it has also put off activities across its portfolio except at its assets in the Permian's Delaware Basin.
Most shale companies have cut their annual budget, slashed or suspended dividends and reduced jobs as they try to shore up cash.
Net loss attributable to the company rose to $1.82 billion, or $4.82 per share, in the first quarter, from $317 million, or 74 cents per share, a year earlier.
Total production rose to 348,000 boe/d from 313,000 boe/d a year earlier, led by output from the Delaware Basin.
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