DENVER and WELD COUNTY — Just a month after it announced 25% cuts to its capital budget, PDC Energy Inc. (Nasdaq: PDCE) plans to cut its capital costs to 50% from its original plans this year and significantly reduce new well operations in the Wattenberg Gas Field as demand for fuel plummets across developed economies.
The second-largest oil producer in Weld County said it would cut its capital spending to between $500 million and $600 million through 2020 compared to its original plan of $1 billion to $1.1 billion and reduce its production volumes company-wide by 20% to 30% in May and June.
It also plans to cut its operating rigs in the Wattenberg Field from three to one next month and furlough its well pad completion crew until the fourth quarter of 2020.
The Wattenberg Field covers southwest Weld County, most of Broomfield County and sections of Boulder, Adams and Denver counties.
In a prepared statement, PDC CEO Bart Brookman said that while the deeper cuts to production, capital spending and employees are “incredibly difficult decisions,” he believes PDC has the liquidity and cash reserves to weather a deep economic crisis roiling the energy industry.
“The industry is in the midst of global demand destruction to which PDC is not exempt,” he said.
The ongoing health and economic crisis caused by the COVID-19 virus is mostly to blame for that global drop in demand, as large swaths of the U.S. and other developed countries urge citizens to stay at home whenever possible and factories producing non-essential goods are shut down, forcing West Texas Intermediate prices to nearly $20 per barrel.
Fellow oil producers have cut back on expenditures in recent weeks, with Occidental Petroleum Corp. (NYSE: OXY) cutting its company-wide production by 6% and Whiting Petroleum Corp. (NYSE: WLL) filing for Chapter 11 bankruptcy in a bid to reorganize its debts.