BW Energy Cuts 2020 Spending by 50%
Oslo-listed BW Energy will cut its 2020 capital spending by half to $125mn owing to increased market volatility and oil price uncertainty, it said March 18.
The company has joined a slew of producers of all sizes who have announced radical cost cutting plans as the Brent crude oil price has plunged to $30/barrel, with the oversupply expected to grow as demand slumps.
“The revised capital spending program for 2020 amounts to approximately $125mn, of which about $30mn was incurred as of the end of February. The revised programme represents a 50% reduction to the company’s previously announced capital expenditure programme of approximately $250mn for 2020,” the company said.
BW Energy announced adjustments to the development programme on the Dussafu Marin licence in Gabon in response to the spread of Covid-19, restriction on international travel, increased market volatility and oil price uncertainty. At the time of the press, Brent was trading at $29/barrel.
The company said the impact of international travel restrictions is limiting its ability to move essential personnel, subcontractors and equipment to and from Gabon. “This may affect the timing of the drilling of the planned DTM-7H well and the subsequent exploration well. The major contracts provide for certain termination rights under the current circumstances. The company has for the same reason decided to not exercise the options for the two additional exploration wells under the existing rig contract,” it said.
In a further response to the market volatility, BW Energy has decided to defer the Ruche phase 1 development. The total Dussafu production for 2020 is projected to be 16,000 – 18,500 b/day.
In Brazil, BW Energy said, it will continue to progress with regulatory and environmental approvals and pursue cost reducing initiatives for the Maromba project as it works toward project final investment decision.