Beach Energy will cut capital expenditure by 20 per cent in response to the recent slide in oil prices.
The SA-based company says it’ll defer some projects, reducing capital expenses by up to $55 million, and that possible cuts from its Cooper Basin project partner Santos could lead to further revisions in its expenditure guidance.
But, it lifted its full production guidance slightly to between 8.9 and 9.4 million barrels of oil equivalent (mmboe), from between 8.6 and 9.4 mmboe previously.
Another energy player, the giant Oil Search, today announced plans to cut costs in response to the drop in oil prices and has flagged up to $US200 million ($A252.37 million) in asset writedowns.
Oil Search on Thursday said it would reduce capital expenditure and was reviewing operating costs, and expected to take pre-tax impairment charges of between $US150 million and $US200 million, primarily linked to reductions in the value of its exploration assets.
But the company said it remained well positioned to weather the sharp slide in oil prices as it announced an eight per cent increase in production and a four per cent rise in revenue in the December quarter thanks to its stake in the massive PNG LNG project.
Meanwhile, oil tumbled to near a six-year low overnight as US crude stocks soared to a record high, sparking fresh fears over the growing global supply glut.
US benchmark West Texas Intermediate for March delivery on Wednesday dropped $US1.78 to $US44.45 a barrel on the New York Mercantile Exchange, its lowest close since March 2009.
European benchmark Brent North Sea crude for March delivery lost $US1.13 at $US48.47 a barrel in London.
Data showed that US crude supplies surged 8.9 million barrels to 406.7 million in the week ending January 23, according to the US Department of Energy.
That was the highest level since the US government began keeping weekly records in 1982. It is also above monthly data since April 1931.
“It’s not a pretty picture,” said Bart Melek, head of commodity strategy at TD Securities. “We’re seeking bottom, but I don’t think we’re there yet.”
The oil market has collapsed by more than 50 per cent since June, plagued by plentiful crude supplies, weak global demand and the decision of the Organisation of Petroleum Exporting Countries to let prices fall.
“If proof were needed that oil prices remain constrained by too much supply, this afternoon’s US inventory data confirmed it,” said CMC Markets analyst Michael Hewson.
“As such, prices could well have further to fall with prospects of a drop below $40 a barrel becoming a reality in the short to medium term.”
– Wire services
