The economic implications of the novel coronavirus and the oil price war initiated between Saudi Arabia and Russia have sent oil markets on a downward spiral.

WTI settled at $20.37/bbl on March 18, dropping 24% on the day and 56% in the last two weeks. Shale operators across the U.S. have acted swiftly to adjust 2020 plans and protect balance sheets. In the Permian, everyone is cutting back.

Parsley Energy revised its baseline capex assumption from $50/bbl WTI to $30-$35/bbl for the remainder of 2020. Capex guidance has been lowered to less than $1 billion from $1.6-1.8 billion. On March 6, the company dropped three frac crews, leaving two running. The 15 rigs that were active in the first two months of 2020 will be reduced to a total of 12 as soon as possible. Within several weeks, the company will drop to four to six rigs and two to three frac spreads for the remainder of the year.

Concho Resources is shoring up its financial outlook by reducing 2020 spending to $2 billion from the prior $2.6-2.8 billion target. Given the fluid situation, the company will continuously revise its plans as needed.

Pioneer Natural Resources cut its 2020 plans, slicing 45% from its drilling, completion, and facilities capex, setting a new range of $1.6-1.8 billion. Water infrastructure spending will be $100 million, which puts the total 2020 spend at $1.7-1.9 billion. Funded fully from cash flow, the program is still expected to generate $500 million at $35/bbl WTI. Within the next two months, Pioneer will reduce its rig count from 22 to 11 and cut contracted completion crews from six to two or three.

Diamondback Energy is reducing completion crews from nine to six and will drop two rigs in April and a third later in Q2; the company was running 21 drilling rigs at the end of February and had anticipated running 20-30 throughout the year. The reduction in operational plans allows the company to lower its 2020 capex guidance. Drill, completion, and equip spending for 2020, is expected to decrease through lower completed well count and lower expected well costs. The company also expects to decrease its infrastructure and midstream capital budgets.

Callon Petroleum is reducing its full-year 2020 capital budget from $975 million to $700-725 million, in order to prioritize financial flexibility and free cash flow. The company’s active rig count, currently nine, will be reduced to five by the end of Q2. Frac crews will be cut to two from five in the same timeframe. The outlook foresees three to four drilling rigs, with two to three in the Permian and one in the Eagle Ford, and one to two frac crews in 2020 and 2021. The company’s focus will be on a high-graded set of shorter-cycle projects in the Midland Basin and Eagle Ford, while Delaware Basin activity will be reserved for the long term.

Matador Resources is taking steps to reduce its capex over the next several months and protect its balance sheet. The company is reducing its rig count from six to three before June 30, with one to be released by the end of March. In Q2, the company plans to maintain those three rigs, which are all operating in the Permian Basin. While Matador is still nailing down its definitive plans for the remainder of the year, it expects to suspend development activities in the Wolf area in Loving County, Texas, by the end of March. A minimum of two rigs will be kept active in the Stateline area in Eddy County, New Mexico.

QEP Resources is reducing planned 2020 and 2021 combined capex by more than $300 million, or nearly 30%; previous guidance for the two-year period was about $570 million per year. All Permian completion operations will be suspended from early May until the beginning of Q4, and the intermediate drilling rig operating in the play will be released during March. The company’s Williston Basin refracturing program will be put on hold.

Devon Energy slashed $500 million from its 2020 capex plans and now has guidance set at $1.3 billion. While the $500 million reduction will be spread across its operational areas, the STACK in Oklahoma and the Powder River Basin will see the most substantial cuts. Development activity will be focused on the economic core of its top-tier Delaware Basin and Eagle Ford assets.

EOG Resources reduced its 2020 capital plans 31% to $4.3-4.7 billion. The company is reducing activity across its portfolio and will focus drilling operations on the Delaware Basin and Eagle Ford. Oil production guidance has been lowered to 446,000-466,000 barrels per day, which will be flat year-over-year.

Apache lowered its capital budget guidance from $1.6-1.9 billion to $1.0-1.2 billion for 2020. The company cut its Permian rig count to zero and plans to reduce activity in Egypt and the North Sea. All activity in Suriname is proceeding as planned.

PDC Energy is dropping its completion crew in the Delaware Basin and running one rig for the remainder of the year. It also plans to reduce its Wattenberg field activity in Q2 from three drilling rigs and two completion crews to two and one, respectively. Capex was cut 20-25% from the initial $1.0-1.1 billion.

Noble Energy’s capex has been lowered by $500 million, or nearly 30%, to $1.1-1.3 billion. Another $50 million in spending reductions have been identified should additional cuts be needed. Noble’s U.S. onshore business will account for 80% of the cuts due to significant flexibility in its drilling and completion activity, given that most of its contractual arrangements are on a well-to-well basis. The Delaware Basin, where the company had planned to drill and complete 50-60 wells, will account for 50% of the cuts.

Marathon Oil will trim at least $500 million from its 2020 capex of $2.4 billion, setting new guidance at $1.9 billion, which is a 30% reduction to 2019. Until further notice, Marathon is suspending its resource play exploration and leasing activity, which eliminated planned wells in its new Woodford-Meramec oil play on the Texas side of the Delaware Basin and in the Louisiana Austin Chalk. This will save $200 million. The company will also immediately suspend all operated D&C operations in Oklahoma, where it is currently running three rigs and one frac crew. Marathon will reduce operated activity in the northern Delaware Basin, where four rigs and one frac crew are running. The company will optimize its development programs in the Eagle Ford and Bakken, where most of its initial capex was targeted. Between those two plays, the company has eight rigs and three frac crews.

On March 12, Ovintiv announced that it is immediately dropping 10 rigs and will idle an additional six in May. Following the reductions, the company will be operating three rigs in the Permian, two in the Anadarko Basin, and two in Canada’s Montney shale. The rig cuts will help to reduce Q2 spending by $300 million and full-year cash costs by $100 million. Ovintiv had anticipated spending $2.7 billion and generating free cash flow for a third consecutive year. The company is prepared to cut capex further throughout the year to ensure cash flow neutrality and balance sheet strength.

Occidental Petroleum announced a drastic reduction in 2020 capital spending, which it dropped from $5.2-5.4 billion to $3.5-3.7 billion. The company is implementing additional operating corporate cost reductions. For the first time in 30 years, Oxy cut its dividend, dropping it to $0.11/share from $0.79/share.

WPX Energy cut $400 million from its 2020 capex and will spend $1.28-1.4 billion.

Cimarex Energy is trimming 40-50% from its original 2020 guidance of $1.25-1.35 billion.

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