Shale cuts...from Bloomberg1 May 2020 20:06
Exxon Mobil Corp. and Chevron Corp. are curbing production in the Permian Basin as shale spending bears the brunt of budget cuts spurred by a crash in crude prices.
Irving, Texas-based Exxon expects to shut in about 100,000 barrels of oil equivalent a day in the West Texas and New Mexico oil field in the second quarter. Chevron is chopping 125,000 barrels a day from its targeted exit rate for the basin this year. It will drop to just 5 rigs, Chief Executive Officer Mike Wirth said in a Bloomberg TV interview Friday.
The Permian Basin has been a growth engine for the U.S. oil giants in recent years, but as a pandemic-fueled plunge in crude prices forces spending cuts, shale investment has been among the first to go.
Chevron Down to Five Rigs in Permian, CEO Wirth Says
WATCH: Chevron Corp. Chief Executive Officer Mike Wirth says the company is down to only 5 rigs in the Permian basin.Daybreak: Americas.” (Source: Bloomberg)
Even independent Permian producers, criticized for growing output at all costs, are dramatically altering their plans. Concho Resources Inc. expects to keep production flat this year while warning that it may be forced to curtail some output. The West Texas-based shale explorer has already voluntarily shut in some production.
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Chevron Corp. said it opposes U.S. government “bailouts” for oil companies that haven’t prepared themselves well enough for a historic crash in crude prices that’s leading to unprecedented shutdowns in the shale patch.
“As companies that have not positioned themselves in a way that would be prudent coming into a tough market, a bailout reinforces the moral hazard argument,” Chief Executive Officer Mike Wirth said Friday in a Bloomberg TV interview. “Market cycles are a part of our industry -- they always have been -- and we don’t need the government to come in and protect us from a part of our industry that we know and that we should prepare for.”
Chevron CEO Wirth on Earnings, Output Drop and Oil-Industry Bailout
Chevron CEO Mike Wirth speaks with Bloomberg’s Alix Steel on “Bloomberg Daybreak: Americas.”
The Federal Reserve revamped its Main Street Lending Program Thursday in ways that will allow battered oil companies to qualify for the aid after industry allies lobbied the Trump administration for changes. For weeks, oil industry advocates have warned the original program structure would prevent beleaguered drillers from accessing capital under the program.
Wirth said, however, that certain programs for companies that have been well managed and now find themselves in a short-term squeeze could make sense.
“Anything should be measured, it should ensure the taxpayers are properly compensated for the use of the tax dollars and should be pretty limited in application and duration to really help through the most difficult times,” he said.
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