Tulsa’s WPX Energy says it’s cutting its 2020 spending by $400 million or 25% as oil prices continued to fall because of a lack of demand and the impact of the coronavirus. Company leadership says it has the flexibility to cut more if necessary.
“We will continue to assess the market and adjust our activity levels as necessary. You can expect us to be flexible and focused on generating free cash flow,” said WPX Chairman and Chief Executive Officer Rick Muncrief.
For 2020, WPX has 95,978 bbl/d of oil hedged with fixed price swaps at a weighted average price of $56.27 per barrel and 20,000 bbl/d with fixed price collars at a weighted average floor price of $53.33.
The revised capital plan of $1,275 million to $1,400 million maintains WPX’s current oil production of roughly 150,000 bbl/d for the balance of the year, which benefits from the March 6 acquisition of Felix Energy.
Based on the revised capital plan and today’s strip pricing, WPX expects to generate at least $150 million of free cash flow in 2020, not including savings for potential service price deflation.
Discussions with vendors about service costs are actively occurring, which presents known opportunities for WPX to lower capital further and increase its free cash flow target.
WPX plans to provide additional details and updates during its first-quarter 2020 press release and investor webcast.
Adds Muncrief, “Our balance sheet, liquidity, commodity hedges, and track record gives WPX an edge in a very difficult period. We’re also grateful for our business partners, service providers and vendors. We never take lightly how our decisions affect others.”