In response to the oil market downturn, ConocoPhillips will cut an additional $1.6 billion from its 2020 operating plan capital expenditures budget, bringing the current estimate to $4.3 billion. Cuts will be primarily focused on operations in the US Lower 48, Alaska, and Canada.
Including its Mar. 18 reduction of $700 million, the company has cut operating plan capital expenditures by $2.3 billion, or 35% compared its original guidance (OGJ Online, Mar. 18, 2020).
Operating costs will be cut by $600 million, representing roughly 10% of the initial 2020 guidance, bringing the current estimate to $5.3 billion. Reductions were sourced from lease operating expenses, general and administrative costs, and foreign exchange impacts.
Production in Canada and the Lower 48 will be curtailed until market conditions improve, the company said. By May, at the Surmont oil sands project in the Athabasca region of northeastern Alberta, the company expects to reduce production by 100,000 b/d of oil gross to 35,000 b/d of oil gross.
Beginning in May, the company will begin curtailing production across its Lower 48 region. The company has recently focused on the Permian basin, Eagle Ford, and Bakken regions. Initial cuts of 125,000 b/d of oil gross are expected. Curtailment decisions will be made on a month-to-month basis and are subject to operating agreements and contractual obligations.
The curtailments represent 200,000 boe/d net to the company.
The company’s share repurchase program and further guidance have been suspended.