ConocoPhillips to curtail 225,000 boe/d of oil output in response to low prices

Houston — ConocoPhillips said Thursday it will cut back its 2020 spending and production volumes more dramatically, slicing its capital spending by 35% and removing a total of 225,000 boe/d from its production guidance.

The largest independent US producer is taking more drastic measures after initially making smaller reductions in March amid the coronavirus pandemic that has sent crude US crude prices below $20/b. S&P Global Platts assessed Midland WTI at $18.92/b Wednesday.

"These actions reflect our view that near-term oil prices will remain weak, largely due to demand impacts from COVID-19 and continued oil oversupply," said ConocoPhillips CEO Ryan Lance in a statement. "We are well-positioned with flexibility to take actions that we believe maintain our relative competitive advantages, as well as our ability to resume programs depending on the timing and path of a recovery."

ConocoPhillips' 2020 average production guidance is now down 18% from 1.25 million boe/d down to about 1.025 million boe/d. The company originally cut back to just 1.23 million boe/d in mid-March.

And the producer's capital budget is now down about 35% from $6.6 billion to $4.3 billion. ConocoPhillips only sliced the budget down to $5.9 billion in March.

The cutbacks will be spread around ConocoPhillips' production areas in US shale, western Canada and Alaska. ConocoPhillips said it will remove about 125,000 boe/d from its US shale plays, including the Eagle Ford Shale, Bakken Shale and the Permian Basin.

About another 65,000 boe/d will come from the Surmont region in Canada.