Marathon Oil Cuts Capex By 30% To Weather Falling Oil Prices
Zacks Investment Research | Mar 11, 2020 12:56AM ET
The recent weakness in the commodity prices prompted energy players to rethink their strategies as well as reconsider capex cuts. Notably, after abiding by the capital discipline during the crude downturn (from mid-2014 to 2016), energy companies again resorted to escalate their capital expenditure since 2017. However, a pullback in the commodity price convinced explorers and producers to take a relatively conservative approach to capex programs again this year. Instead of raising their capital outlays, the energy companies are now finding it more prudent to focus on maximizing shareholder value.
West Texas Intermediate started the year with a little above $60 per barrel of oil. However, this rally was pretty short-lived with the commodity price plunging to multi-year lows to settle at $31.13 on Mar 9.
Reacting to this sudden oil price slump, Marathon Oil Corporation (NYSE:MRO) recently chopped its 2020 capital investment by a minimum of $500 million from the earlier provided capex outlook of $2.4 billion to nearly $1.9 billion, indicating a 30% reduction from the reported capex figure of 2019.
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