US shale producers say 2017 plans were too aggressive
A number of US shale producers say they are starting to pull back on aggressive capital spending plans for this year due to languishing oil prices.
So far this week, Anadarko, ConocoPhillips, Whiting Petroleum and Hess Corp have cut a combined $750 million from their capex plans. Each of the companies have blamed low oil prices for the cutbacks.
According to Reuters, Noble Energy and Marathon Oil are also expected to cut their spending plans to appease Wall Street’s demands for fiscal restraint.
“We sincerely believe the volatility of the current operating environment requires financial discipline,” Anadarko Chief Executive Al Walker told investors on Tuesday.
“Pursuing growth without adequate returns is something we will avoid.”
Despite having healthy balance sheets, the companies are cutting their spending plans. Hess cut $100 million from its 2017 spending plans even though it has $2.5 billion in the bank. Anadarko cut $300 million despite having a hefty $6 billion banked.
“In the current low price environment, we continue our efforts to reduce both capital and operating costs,” Hess Chief Executive John Hess told investors after the New York-based company released its Q2 report on Wednesday.
There are no plans to cut back on the number of operational rigs in US shale plays, however. According to Hess, increased rig efficiency means it can now drill four rigs in the same number of wells that would have taken six last year.
Due to capex cuts at shale companies, oilfield service companies report their shares are down. Halliburton shares dropped over 5 per cent in the past week.
