Since OGJ’s annual capital spending report was published one month ago (OGJ, Mar. 2, 2020, p. 18), the world oil market has been experiencing unprecedented pressure from slump in demand due to coronavirus, and a price war between top exporters Saudi Arabia and Russia.
The collapse in oil prices and pessimistic prospects over the near-term market have pushed North American oil and gas companies to slash 2020 budgets (Table 1). On average, US E&Ps with officially updated budgets have reduced 2020 spending 32% compared to initial plans. Updated overall 2020 capital spending is now 38% below the 2019 level. Similarly, Canadian companies have reduced 2020 capital budgets 28.6% below initial plans and 27.8% below 2019 levels.
Global majors, including Saudi Aramco, Chevron, BP, Shell, Equinor, and Total, are cutting budgets an average of 20% from initial spending plans. ExxonMobil said it will cut capital expenditure by 20% but has yet to make an official announcement.
