Denbury Resources Inc., Plano, Tex., cut $80 million from its 2020 capital budget and will defer its Cedar Creek Anticline (CCA) CO2 tertiary flood development beyond the end of the year in response to recent developments, including the COVID-19 pandemic, macroeconomic uncertainty, and the decline in oil prices. The 44% reduction cuts the company’s 2020 budget, excluding acquisitions and capitalized interest, to $95-105 million.
The CCA EOR project targeted initial tertiary production by late 2021 or early 2022, Denbury said upon project sanction in June 2018 (OGJ Online, June 19, 2018).
Estimated full-year 2020 oil and gas production will be reduced by 3,000 boe/d from the 54,500 boe/d midpoint of its initial 2020 production estimates. Half of this expected production impact is due to the reduction in capital spending, and the other half is based on anticipated operating cost reduction measures that are expected to also impact production, such as shutting down compressors or delaying well repairs and workovers that are uneconomic.
Production could be further curtailed by future regulatory actions or limitations in storage and/or takeaway capacity, the company said.