Denver-based Extraction Oil and Gas cuts spending because of low prices due to coronavirus, Russia-Saudi Arabia price war
Extraction Oil and Gas joins a growing number of companies that are cutting their spending due to low prices because of the coronavirus pandemic and a clash between Russia and Saudi Arabia over production levels.
Denver-based Extraction, which primarily operates along the Front Range north of Denver, said Thursday that it has cut its 2020 budget for exploration and production by 42% to a range of $250 million to $300 million.
Extraction has also reduced its 2020 general and administrative cash budget by 18% to a range of $40 million to $50 million, the company said in a statement.
“All officers of Extraction, including the executive team, have elected to take a 10% reduction in 2020 salaries and bonus compensation effective immediately,” said Extraction CEO Matt Owens.
The company will continue to monitor oil prices and the economy and might further adjust its activity levels, Owens added.
In February, a reorganization of Extraction’s workforce included the elimination of about 20% of its statewide positions, spokesman Brian Cain said in an email.
The company’s stock price closed at 40 cents per share Thursday. It was $4.28 per share on April 3, 2019.
Extraction was Colorado’s third-largest oil and gas producer as of Tuesday, according to figures from the Colorado Oil and Gas Conservation Commission. It is among several Colorado energy companies whose shares plunged following the one-two punch of falling demand as the global coronavirus pandemic has depressed economic activity and a price war between Russia and Saudi Arabia drove down oil prices.
Negotiations between Russia and Saudi Arabia on cutting production to stabilize prices blew up in early March, leading Saudi Arabia to ramp up production in retaliation. The price per-barrel dropped to $20 or lower, but rebounded a little Thursday after President Donald Trump said he expects the two countries to end their price war and cut production.
Extraction is fighting a move by Broomfield to temporarily halt its operations on an 18-well pad in the city. Hearings are scheduled Friday and next week on a temporary restraining order granted to Extraction by a state district court.
Broomfield elected officials want Extraction to postpone work on the pad while the statewide stay-at-home order to slow the spread of the coronavirus is in effect.
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