Oil companies slash spending, jobs as prices slide for second time
By Anna Driver
HOUSTON (Reuters) - The stark reality of a much-feared second dip in crude prices is prompting global oil majors and nimble U.S. shale companies alike to ax spending once again a year after the first price crash started.
In North Dakota, Whiting Petroleum Corp (WLL.N: Quote), the top producer in the No. 2 U.S. oil patch, cut its capital expenditure budget days after optimistically raising it 15 percent on bets the renewed downturn in prices would be a temporary blip.
ConocoPhillips (COP.N: Quote), the largest U.S. independent, trimmed its 2015 budget for the third time on Thursday, by $500 million to $11 billion.
More ominously, Linn Energy LLC LINE.O, a small exploration and production company, suspended its quarterly distribution to investors on Thursday to conserve precious cash that has largely evaporated on the price drop. Its shares fell 26 percent.
Conoco CEO Ryan Lance said the company was preparing for "lower, more volatile prices."
Crude prices have been on a roller coaster since mid-2014, when global oversupply started to chip away at levels higher than $100 a barrel. After hitting a bottom of $42 in March, U.S. crude rallied to around $60 in May, providing some breathing room to shale companies that saw a dramatic reduction in cash flow.
But since June 23, when the latest rout started, oil has tumbled about 20 percent to around $49 a barrel. The second dip has dashed hopes raised in May that prices would hold steady at around $60 a barrel or inch towards $65, a level that many U.S. shale oil producers have said would allow them to add drilling rigs and emerge from their defensive crouch. Continued...