[Editor's note: This story was updated at 5:17 p.m. CT May 6.]
Marathon Oil Corp. and Pioneer Natural Resources Co. on May 6 detailed new plans to cut costs, as the U.S. oil producers seek ways to overcome a slump in crude prices due to excess supply and a plunge in demand owed to the COVID-19 pandemic.
Shale producers have been forced to cut expenses and shore up cash as crude prices have slumped due to a month-long price war between top producers Saudi Arabia and Russia, made worse by the COVID-19 pandemic.
North American oil and gas producers have cut their 2020 spending by nearly 34%, or about $41.6 billion, from their original estimates, according to data compiled by Reuters.
Pioneer now expects 2020 capex between $1.4 billion and $1.6 billion, down from its prior estimates of $1.7 billion to $1.9 billion and 55% lower than its original budget.
The company's production for the year is now expected to be between 341,000 boe/d to 359,000 boe/d, about 11% lower from the midpoint of its previous estimates.
The forecast includes a voluntary cut of about 7,000 bbl/d of oil, Pioneer said.
Marathon, which has slashed spending twice within 30 days, suspended its quarterly dividend and share repurchase program as it swung to an adjusted loss in the first quarter and said it expected $350 million in annualized cost reductions.
"We're dramatically reducing our capital expenditures, including a pause in virtually all completion activity during second quarter, and we will continue to optimize our capital program in response to market conditions," Marathon CEO Lee Tillman said.
Most shale companies need prices above $40 per barrel to break even on costs at the well. U.S. crude, which has fallen about 60% this year, was trading at over $23/bbl on May 6.
Marathon's steps to bring down costs also include management pay cuts and reduction in its employee and contractor base by 16% and 70% respectively.
Recommended Reading
August Well Permits Rebound in August, led by the Permian Basin
2024-09-18 - Analysis by Evercore ISI shows approved well permits in the Permian Basin, Marcellus and Eagle Ford shales and the Bakken were up month-over-month and compared to 2023.
Kolibri Global Drills First Three SCOOP Wells in Tishomingo Field
2024-09-18 - Kolibri Global Energy reported drilling the three wells in an average 14 days, beating its estimated 20-day drilling schedule.
Permian Resources Closes $820MM Bolt-on of Oxy’s Delaware Assets
2024-09-17 - The Permian Resources acquisition includes about 29,500 net acres, 9,900 net royalty acres and average production of 15,000 boe/d from Occidental Petroleum’s assets in Reeves County, Texas.
Seadrill to Adopt Oil States’ Offshore MPD Technology
2024-09-17 - As part of their collaboration, Seadrill will be adopting Oil States International’s managed pressure drilling integrated riser joints in its offshore drilling operations.
E&P Highlights: Sept. 16, 2024
2024-09-16 - Here’s a roundup of the latest E&P headlines, with an update on Hurricane Francine and a major contract between Saipem and QatarEnergy.