ConocoPhillips Slashes 2020 Capex As Oil Price Remains Soft
Zacks Investment Research | Mar 18, 2020 09:26PM ET
ConocoPhillips (NYSE:COP) recently announced that it has revised downward its 2020 capital budget in the wake of a weak crude pricing scenario.
The company’s revised capital budget for this year will be roughly 10% lower as compared to the prior guidance. With oil price now in the bearish territory since the coronavirus pandemic is hurting global energy demand, the outlook for exploration and production business seems gloomy. Thus, upstream energy players are restricting their operational activities and thereby reducing capital budget. Other energy firms that followed suit are Cimarex Energy Co. (NYSE:XEC) , Pioneer Natural Resources Company (NYSE:PXD) and EOG Resources Inc. (NYSE:EOG) .
In its latest operational update, triggered by a lower capital budget, ConocoPhillips revealed its plan of slowing down development operations in the Lower 48. The upstream firm is also planning to defer drilling activities in Alaska.
Reduced operating activities also compelled the upstream firm to lower its production guidance for this year. ConocoPhillips’ revised projected daily production volumes for 2020 will be lowered by 20,000 barrel of oil equivalent.
Moreover, the company has an intention of slowing down the pace of its 2020 stock buy-back program. Starting second quarter, the quarterly run rate of the program will be lowered to $250 million from the prior $750 million.
With all those measures, ConocoPhillips believes that it will be able to save a total cash amount of $2.2 billion.
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