Ovintiv Inc. will drop roughly two-thirds of its operated rigs and reduce second quarter 2020 capital investments $300 million and full year cash costs by $100 million. The company said the move is the first step in response to the recent drop in oil prices, and that capital investments and activity levels could be cut further as market conditions dictate.
Ten operated rigs will be dropped immediately. Another six operated rigs will be dropped in May 2020. Following the reductions, Ovintiv will have three operated rigs in the Permian, two in the Anadarko, and two in the Montney. An update to 2020 guidance is expected in conjunction with first-quarter reporting.
The company’s credit facilities are fixed at $4 billion until maturity in July 2024. Current liquidity is roughly $3.5 billion, which represents the $4 billion credit facilities plus cash-on-hand, less the company's current commercial paper balance.
Approximately 80% of total long-term debt is due in 2024, or beyond, with a weighted average bond maturity of 10 years.
The company said it has flexibility to manage the late 2021 and 2022 maturities, including the use of the credit facilities.