Houston oil company Apache Corp. is making deeper budget cuts while its Permian Basin rig count has declined to zero.
Apache reported Friday that the company has cut $1.3 billion from this year’s capital spending budget, reducing the company’s annual dividend by $340 million and cutting $150 million in other expenses. The company previously announced a $700 million capital spending cut.
The further reductions come two weeks after Apache announced that the company would reduce its Permian Basin rig count to zero and a week after laying off 85 employees at its Midland office. Standard & Poor’s reduced Apache’s credit rating from BBB to BB+ on Thursday.
In a statement responding to the credit downgrade, Apache’s Chief Financial Officer Stephen Riney said the company has $4.0 billion of credit from 18 banks through through March 2024.
“Apache has ample liquidity and a very manageable bond maturity profile for the next five years,” Riney said. “We have taken aggressive actions to protect our balance sheet and cash flows.”
Apache is making the deeper cuts as numerous energy companies cut billions of dollars from their budgets in response to rapidly falling oil prices.
The ongoing oil price war between Russia and Saudi Arabia has exacerbated a global supply glut while the coronavirus outbreak has lowered global demand. West Texas Intermediate crude oil is trading around $21 per barrel, a price not seen since February 2002.
Record low oil prices has Apache focusing more on the company’s international and offshore operations. The company posted a $3.6 billion loss in 2019 while reporting $6.4 billion of revenue.
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