Diamondback Cuts Drilling Activity as Oil Prices Tumble
Diamondback Energy Inc said on Monday it was reducing drilling activity immediately, as the oil and gas producer tackles one of the steepest declines in oil prices in decades.
Oil prices lost as much as a third of their value on Monday in the biggest daily rout since the 1991 Gulf War, after Saudi Arabia signaled it would hike output to win market share at a time when the coronavirus epidemic has left the market oversupplied.
The company's shares were down nearly 22% in light premarket trading amid a broader fall in oil and gas related stocks.
Diamondback expects to drop two rigs in April and a third later in the second quarter. The company will also cut completion crews to six from nine.
"As a result of current and expected oil price weakness, we have immediately reduced development activity and expect lower activity levels to continue until we see clear signs of commodity price recovery," Chief Executive Officer Travis Stice said in a statement.
To that effect, Diamondback also said it would cut its capital expenditure budget for the year.
"Diamondback has never been about growth for growth's sake... Because the expected returns of our 2020 program have decreased, we have decided to wait for higher commodity prices to return to growth," Stice said.
(Reporting by Shanti S Nair; Editing by Shinjini Ganguli)