Marathon Dials Back Activity, Trims 2020 Budget | Rigzone
Both large and small oil and gas companies continue to pivot in response to chaotic market conditions. Marathon Oil is one of the latest to reveal an immediate spending reduction of at least $500 million related to its 2020 capital budget of $2.4 billion. The revised budget of $1.9 billion or less is a 30 percent reduction in comparison to actual 2019 capital spending.
The 2020 budget reduction will include:
- Suspending further resource play exploration drilling and leasing activity
- Immediately suspending all operated drilling and completion activity in Oklahoma, where Marathon is running three rigs and one frac crew;
- Reducing operated drilling and completion activity in the Northern Delaware, where the company is running four rigs and one frac crew;
- Optimizing development programs in the Eagle Ford and Bakken, where the company is running eight rigs and three frac crews.
“In response to the recent commodity price volatility from simultaneous supply and demand shocks, we’re taking swift and decisive action to defend our cash flow generation, protect our balance sheet, and fund our dividend,” Marathon Oil Chairman, President, and CEO Lee Tillman said in a written statement.
“We believe our foundational work is already in place with a high-quality multi-basin portfolio that affords us the flexibility that we’re exercising today. Our balance sheet reflects a conservative leverage profile and significant liquidity. And, at every level of the company we continue to strive to relentlessly drive down our cash flow breakeven, while operating safely and responsibly. This framework has served us well, and it positions us to navigate a challenging oil price environment ahead.”
Marathon ended 2019 with $3.9 billion of liquidity and no near-term debt maturities. Liquidity at year end 2019 was $858 million of cash and cash equivalents and an untapped $3 billion credit facility. Also, the maturity date for the credit facility was recently extended to May 2023.
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