Diamondback Energy Inc., Midland, is reducing its operating activity and capital budget for 2020, citing recent commodity price volatility.
The Permian Basin-focused company is reducing activity immediately to six completion crews from nine completion and expects to drop two drilling rigs in April and a third later in this year’s second quarter. One completion crew was previously dropped as part of the company’s original 2020 plan.
Drill, complete, and equip (DC&E) spend for the year is expected to decrease through the combination of a lower completed well count and lower expected well costs, and corresponding infrastructure and midstream capital budgets are expected to decrease as well, the company said Mar. 9.
The reduced activity is expected to result in lower 2020 oil production than originally forecast, but no additional details were released. In February, the company reported total net production guidance for the year of 310,000–325,000 boe/d and a previous 2020 capital spend of $2.8–3.0 billion.
Full year 2019 average production was 187,700 b/d of oil (283,000 boe/d), an increase of 26% from combined 2018 average daily oil volumes, after adjusting for the full year 2018 impact of the Energen Corp. acquisition which closed Nov. 29, 2018 (OGJ Online, Aug. 15, 2018). Full year 2019 capital expenditures were $2.921 billion and turned 317 operated horizontal wells to production.