Devon Energy announced further reduce to its 2020 capital expenditure (CAPEX) outlook in the wake, adding $300 million to its total cuts. The company’s revised capital outlook represents a drop of nearly 45% from its original 2020 capital budget.
Devon said the $300 million will primarily come from the deferral of activity in the Eagle Ford, improved capital efficiencies in the Delaware Basin, and lower service-cost pricing throughout its portfolio. The company said it is prepared to further reduce its CAPEX should commodity prices remain weak.
“Our top priority in this environment is to protect Devon’s financial strength and liquidity,” Dave Hager, Devon President and CEO, said in a statement. “Our decisive actions to date have allowed us to rapidly recalibrate drilling and completion activity to ensure we can fund all our 2020 capital requirements within cash flow. We will continue to assess market conditions and adjust activity levels as necessary to ensure the long-term viability of our business.”
Earlier in March, Devon cut spending by $500 million in response to the drop in crude oil prices following the COVID-19 outbreak and oil price standoff between Saudi Arabia and Russia.
Devon previously disclosed that it has approximately 80% of its estimated 2020 oil production protected at an average floor price of $45 WTI. It also secured hedges on approximately 40% of its estimated natural gas production at an average Henry Hub protected floor price of $2.35 per million cu-ft.