Noble Energy Inc., Houston, has cut an additional $350 million from its 2020 capital expenditures budget, a 50% reduction at the midpoint of its original guidance, in response to the COVID-19 pandemic and the decline in oil and gas demand and prices.
The company’s planned budget is now $800-900 million. The company cut guidance by $500 million in March (OGJ Online, Mar. 13, 2020).
The incremental spending reductions are primarily in the US onshore business, as the company defers planned Delaware and DJ basin activity until commodity prices improve. Updated 2020 US onshore capital allocation is estimated to be $600 million, with $250 million planned for international/offshore.
The company plans to run one rig in the DJ basin through the remainder of the year. Completion activities are being deferred with the possibility to resume completions late in the year based upon economic and commodity conditions.
The company has identified an additional $125 million in cash cost savings (from lease operating, production taxes, gathering and transportation, general and administrative, and asset retirement).
Executive salaries have been cut 10-20% and directors’ cash retainers have been cut 25% through year-end. Employee furlough and part-time programs have impacted more than 30% of the company’s US workforce.
At the end of March, Noble Energy had $4.4 billion in liquidity, including $1.4 billion in cash and $3.0 billion in available revolver capacity. The company drew $1 billion from its revolving credit facility during the first quarter. The company’s revolving credit facility is unsecured and provides committed access to $4 billion through March 2023.
The company is withdrawing its previously issued guidance for 2020 and intends to provide updated guidance at its first quarter 2020 conference call.