Oil and Gas Capital Spending Cuts Much Larger Than Production Cuts

Energy

Published: November 18, 2015 12:50 pm

Last Updated: January 13, 2020 5:02 pm

Small and midsize oil and gas producers are expected to reduce production by about 1% year over year in the fourth quarter of 2015. Capital spending is expected to be 41% below 2014 levels.

The data were included in a report by RBN Energy published on the firm’s blog Wednesday morning. Among the companies represented in the small and medium-sized group are Continental Resources Inc. (NYSE: CLR), Concho Resources Inc. (NYSE: CXO) and Pioneer Natural Resources Co. (NYSE: PXD).

In 2014, Continental’s actual capital spending totaled $4.53 billion. In the first quarter of this year, the company forecast 2015 spending at $2.7 billion (down 40%), a number the company has not changed so far this year. However, Continental’s estimated production for 2015 is forecast to fall by just 3% to just under 215,000 barrels a day this year.

Concho expects production to remain essentially flat at around 144,000 barrels of oil equivalent per day, but forecasts capital expenditure (capex) spending down 33% from about $2.55 billion in 2014 to $1.7 billion this year.

Pioneer spent $3.48 billion on capital projects last year and originally cut its 2015 forecast to $1.6 billion, a 54% drop. At the end of the third quarter, the company raised its projected capex budget to $1.95 billion, a drop of 44%. Production is expected to rise 7% to around 214,000 barrels of oil equivalent per day.

The analysts also took a look at larger players and companies more heavily weighted to natural gas production.

Here is RBN Energy’s takeaway:

[W]e are not expecting a serious change in activity levels in the industry. These companies are estimating a 1% decline in oil and gas production for 2016.

In summary, it does not appear that today’s punishingly low crude and gas prices [have] yet to materially discourage oil and gas production in the major shale plays.

Sounds about right to us, and worth keeping in mind as you watch crude prices bounce higher from time to time.

ALSO READ: 4 Companies That Investors Want Most to Meet With at Huge RBC MLP Conference

100 Million Americans Are Missing This Crucial Retirement Tool

The thought of burdening your family with a financial disaster is most Americans’ nightmare. However, recent studies show that over 100 million Americans still don’t have proper life insurance in the event they pass away.

Life insurance can bring peace of mind – ensuring your loved ones are safeguarded against unforeseen expenses and debts. With premiums often lower than expected and a variety of plans tailored to different life stages and health conditions, securing a policy is more accessible than ever.

A quick, no-obligation quote can provide valuable insight into what’s available and what might best suit your family’s needs. Life insurance is a simple step you can take today to help secure peace of mind for your loved ones tomorrow.

Click here to learn how to get a quote in just a few minutes.