At least one West Texas oil production company has cut its production for the remainder of 2020.
Diamondback Energy Inc. announced a 5% cut in oil production and intentions to hedge the majority of its output.
With prices of West Texas Intermediate oil sagging to $20.09 in recent days, the Midland, Texas-based company said it now expects to average between 295,000 and 310,000 barrels of oil equivalent a day. It previously had a guidance of 310,000 to 325,000 Boe/d.
Earlier, the exploration and production player announced a cutback in its completion activity, putting all completion crews functioning for the company on a one-three month long hiatus. Post the halting period, the company plans to resume its drilling activities, reactivate crews and operate three to five completion crews (indicating a reduction from 9 crews) along with the completion of 170-200 gross wells with roughly 10,000 feet average lateral length for the remainder of the year.
To check further deterioration in Diamondback Energy’s cash flows, the company has hedged a huge chunk of estimated oil production for 2020 and 2021 under the prevalent volatile oil price environment.
In recent days, shares of the company rose nearly $4 reaching a Thursday close of $29.05.