Houston Chronicle

Midland exploration and production company Diamondback Energy is cutting its 2020 drilling budget for a second time this month as crude oil continue to fall to nearly 20-year lows.

Diamondback Energy cuts budget again as oil prices continue to sink- oil and gas 360

Source: Houston Chronicle

In a statement issued late last week, Diamondback has cut $1.2 billion from hits capital budget, meaning that the company now plans to spend between $1.5 billion and $1.9 billion on drilling and completing new wells this — and plans to cut more, if oil prices continue to fall.

Diamondback made the announcement at a time when many exploration and production companies are cutting their drilling budgets in response to rapidly falling oil prices.

A showdown between Russia and Saudi Arabia has exacerbated a global supply glut while the coronavirus outbreak has lowered global demand. West Texas Intermediate crude oil closed trading at $22.43 per barrel on Friday afternoon, a price not seen since March 2002.

Ranked as the fourth most active driller in Texas based on drilling permits, Diamondback Energy announced budget cuts when oil prices fell down to the $30 per barrel range earlier this month. However, oil prices kept falling prompting the company to cut even more costs.

Since those original budget cuts, Diamondback ordered all of its hydraulic fracturing crews to take a one-month break. After that break, the company expects to “judiciously reactivate” crews and run between three and five of them depending on oil prices — down from nine crews, for the rest of the year.

Founded in 2007, Diamondback Energy focuses exclusively in the Permian Basin of West Texas. The company reported a $240 million profit on nearly $4 billion of revenue in 2019.


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