Denver-based Ovintiv, an active driller in Oklahoma’s STACK joined the list of firms slashing spending and drilling operations. But it plans to continue Oklahoma operations with at least two rigs for now.
Ovintiv, formerly known as Encana, had been based in Calgary with a major operations center in Denver, but it shifted to being a U.S. company and changed its name earlier this year.
Its last completed well in Oklahoma was in Kingfisher County and reported March 9. It was the second of two wells drilled on a single pad at 30 17N 9W, a site 8 miles southeast of Hitchcock. The two Channel 1709 wells had combined production of 1,169 barrels of oil a day after their completions in December 2019.
Ovintiv and Noble Energy, one of Colorado’s biggest producers, are among the latest U.S. oil companies slashing spending and drilling plans. The moves come in response to this month’s oil price crash and the COVID-19 disease epidemic according to the Denver Business Journal.
Market conditions are changing rapidly, and the company seeks to maintain a strong balance sheet, it said.
“We are moving quickly and decisively in response to these volatile and challenging times,” said Ovintiv CEO Doug Suttles, in a written statement. “It is imperative to take immediate action, and we are dropping roughly two-thirds of our operated rigs and reducing our cash costs by $100 million.”
Ovintiv is immediately halting work of 10 drilling rigs, and it plans to drop another six in May.
Afterward, Ovintiv will have three operated rigs in the Permian Basin of West Texas, two in Oklahoma’s Anadarko Basin and two in the Montney region in Canada.
The company may make other financial moves, it said, and will update its 2020 guidance to investors when it reports its first-quarter results.
Houston-based Noble Energy Inc. (Nasdaq: NBL) is also reducing its 2020 capital spending by $500 million, about 80% of the reductions coming to its U.S. operations.
“Deferring activity until commodity prices recover protects our investment returns, maintains free cash flow and strengthens the balance sheet,” said CEO David Stover, in a written statement.
Noble Energy is the second-largest oil and gas producer by volume in Colorado.
The company didn’t detail rig-count reductions. Noble Energy said that more than half of its spending pullback will occur in its Delaware Basin properties in West Texas, part of the larger Permian Basin.
Noble Energy last year began work on Colorado’s largest comprehensive drilling plan, a 100-square-mile area in rural central Weld County where is expected to add 772 oil and gas wells over six years.
The acreage has drilling sites in close proximity and has been designed to maximize cost effectiveness of drilling new wells.
Source: Denver Business Journal