Denbury Resources is cutting 44%, or approximately $80 million, from its 2020 capital budget in response to the decline in oil prices stemming in part from the COVID-19 pandemic. As part of its response, the company has decided to defer its Cedar Creek Anticline CO2 tertiary flood development project beyond this year, steps it says are being taken to reduce its cash expenditures and preserve liquidity.
“Our portfolio allows us to swiftly adjust to changes in market conditions, including changes in significant as those we have experienced over the last few weeks,” Chris Kendall, Denbury President and CEO, said in a statement. “We remain highly focused on controlling what we can control in this challenging and uncertain environment.”
Based on current projections, Denbury said it expects estimated full-year 2020 oil and gas production to go down by approximately 3,000 boe/d from the 54,000 boe/d midpoint of its initial 2020 production estimates. Approximately half of that estimated drop will come from a reduction in spending, and the other half is based on anticipated operating cost reduction measures that are also expected to impact production, such as shutting down compressors or delaying well repairs.
Denbury said production could be further curtailed by future regulatory actions or limitations in storage and/or takeaway capacity.