EOG Resources Inc. has cut an additional $1 billion from its exploration and development expenditures for 2020. The range is expected to be $3.3-3.7 billion, including facilities and gathering, processing and other expenditures, and excluding acquisitions, non‐cash transactions and asset retirement costs. On Mar. 16, the company cut $3.0 billion from its original guidance (OGJ Online, Mar. 16, 2020).
As part of its updated 2020 plan, lowered its operated rig count to eight rigs from 36 rigs during the last 6 weeks, with an average of six rigs expected for the remainder of 2020. EOG has identified over 4,500 net drilling locations capable of generating strong rates of return at less than $30/bbl WTI and will focus its activity on these wells.
EOG's revised capital plan targets full-year 2020 crude oil production of 390,000 bo/d—a 15% decrease compared with full-year 2019 levels. EOG currently plans to bring about 485 net wells onto production for the full-year 2020 compared with the original forecast of 800 net wells, with a focus on the Delaware basin and South Texas Eagle Ford.
In order to generate higher rates of return, the company has elected to defer some of its production until oil prices recover. This includes delaying the startup of about 150 net new wells until the second half of 2020 and the shut-in of existing production. The net production volume associated with the shut-in of existing wells was about 8,000 bo/d in March, 24,000 bo/d in April, and is estimated to be 125,000 bo/d in May, and 100,000 bo/d in June, with an average of 40,000 bo/d for the full-year 2020.
First quarter 2020 net income was $10 million compared with first quarter 2019 net income of $635 million. Adjusted non-GAAP net income for the first quarter 2020 was $318 million compared with adjusted non-GAAP net income of $689 million for the same prior year period. Net cash provided by operating activities for the first quarter was $2.6 billion.
Crude oil production volumes in the first quarter were in line with the target range while capital expenditures were 14% below the target midpoint. Total company crude oil volumes of 483,300 bo/d grew 11% compared with the first quarter 2019. Natural gas liquids production increased 35%, supported by the increased recovery of ethane in natural gas processing operations. Natural gas volumes grew 5%, contributing to total company daily production growth of 13%.