U.S. oil company Marathon Oil has decided to cut its 2020 CAPEX further, for the second time in less than a month.
The company, with assets in the U.S. onshore plays such as Bakken and Eagle Ford, and in Equatorial Guinea offshore space, one Wednesday revised its 2020 capital budget to $1.3 billion „or less." This is a $600 million downward revision from the guidance in March.
This represents a cumulative budget reduction of $1.1 billion from the initial 2020 capital spending guidance.
"2020 capital spending is now expected to be approximately 50% below actual capital spending in 2019,“ Marathon Oil said.
In addition to previously announced actions to fully suspend Resource Play Exploration (REx) and Oklahoma activity, the Company now plans to suspend further drilling activity in Northern Delaware, with only a limited number of wells to sales expected through the balance of the year, it said, adding that it would continue to optimize development plans in the Bakken and Eagle Ford.
The revised 2020 capital budget of $1.3 billion or less includes the implementation of second-quarter frac holidays in the Bakken and Eagle Ford, before transitioning to a lower and more continuous drilling and completion program over the second half of 2020 in both Basins.
"Marathon Oil retains the flexibility to adjust capital spending plans as necessary in response to a dynamic macro environment," the company said.
"Marathon Oil Chairman, President, and CEO Lee Tillman said:" Against a highly volatile and uncertain environment, these decisive actions are designed first and foremost to protect our balance sheet and our hard-earned financial strength. We remain investment grade at all primary rating agencies, with recent reviews by both Fitch and S&P, and maintain a strong liquidity position with no near-term debt maturities."
"Our financial strength, high-quality portfolio, and ongoing focus on reducing our cost structure position us well to navigate this extraordinary time for our industry."
Marathon did not say if the cuts will affect its operation offshore Equatorial Guinea where the company operates the offshore Alba field, and has equity interests in the Alba liquefied petroleum gas plant, Atlantic Methanol Production Co., and a liquefied natural gas production facility.
In 2019, the company signed a definitive agreement to process third-party Alen Unit gas through existing infrastructure located in Punta Europa, in Equatorial Guinea, with first gas sales from the Alen Unit expected in 2021.