Reduces Q2 2020 capex by 60%
Cancels completions for the quarter
Denver — Following the crude oil price crash, Ovintiv, formerly Encana, has adopted what it calls a "dynamic shut-in strategy" on producing wells and has halted all drilling and completion activities in multiple basins, including the Eagle Ford, Bakken, Uinta and Duvernay.
Not registered?
Receive daily email alerts, subscriber notes & personalize your experience.
Register Now"These are challenging times, but we are using the flexibility we purposely built into our business to maintain financial strength and set our company up to thrive in whatever new environment emerges in the coming months and years," said Ovintiv CEO Doug Suttles during a Q1 2020 earnings call Friday morning. "Our focus on cost reductions is making a huge difference today and for the future."
Ovintiv's current net shut-in volumes measure about 65,000 barrels of oil equivalent per day, including 35,000 b/d of crude and condensate. The company has also reduced capital expenditures by 60%, or $500 million, during the second quarter as well as drastically reduced its active rig count.
"In response to low oil prices, a dynamic shut-in strategy has been developed and is based on variable costs/margins and price factors," the company said. "Shutting in wells with higher variable costs allows volumes to be deferred into higher-priced periods in the future."
By mid-May, Ovintiv plans to have dropped two-thirds of its drilling fleet, leaving seven rigs in operation, including three Permian, two Anadarko, and two Montney rigs. No frack crews will be deployed as the company has deferred all completion activity during the second quarter.
Producers across the board have significantly scaled back drilling and completion operations since prices tanked in March. The total US oil and gas rig count fell 34 to a total of 398 in the week ended May 6, as Permian basin drilling activity continued to decline, according to Enverus. The decline in oil-focused drilling operations has been sharp, with the nationwide rig count down 59% since March 4. Rig counts in the five major oil-focused basins, the Permian, SCOOP-STACK, Eagle Ford, Williston and Denver-Julesburg, have all declined by at least 50% from early March.
Baker Hughes released an even lower rig number of 374 as of May 8. It proved to be the lowest rig count the energy services firm has ever reported, going back to when it first started collecting the data in 1940. Canada hit a record low of 26 rigs two weeks prior.
Due to the crude price collapse, S&P Global Platts Analytics data shows internal rates of return for the average well in every oil-rich US play are negative. This is based on WTI ranging from $12 to $26/b over the 12-month forward curve. The only plays with positive IRRs are natural gas, including the Marcellus and Utica dry and the Haynesville Shale. The 12-month forward curve for Henry Hub ranges from $1.76 to $2.58/Mcf.
Platts Analytics IRRs are based on a half-cycle, post-federal corporate tax analysis, which excludes sunk costs such as acreage acquisition, seismic and appraisal drilling.
"strategy" - Google News
May 09, 2020 at 04:54AM
https://ift.tt/3fwwKNb
Ovintiv utilizes 'dynamic shut-in strategy' and culls 65000 boe/d - S&P Global
"strategy" - Google News
https://ift.tt/2Ys7QbK
https://ift.tt/2zRd1Yo
Bagikan Berita Ini
0 Response to "Ovintiv utilizes 'dynamic shut-in strategy' and culls 65000 boe/d - S&P Global"
Post a Comment