Oil and gas companies have begun reducing their operations in the Permian Basin as the spread of the new coronavirus slows global energy demands and adds to the drop in the price of oil.
The Houston-based Apache Corporation recently announced it would pull all its oil and gas rigs out of the Permian to save on short-term spending, the Carlsbad Current-Argus reports.
The company planned to reduce its 2020 capital investment by almost $1 billion.
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In the coming weeks, the company plans to reduce its Permian rig count to zero, read a March 12 news release, to limit its exposure to short-cycle oil projects.
Chief Executive Officer John Christmann said the reductions were needed during the market's struggles. Apache must remain ready to address further volatility in the coming months, he said.
"We are significantly reducing our planned rig count and well completions for the remainder of the year, and our capital spending plan will remain flexible based on market conditions," Christmann said.
Meanwhile, Pioneer Natural Resources, which operates mostly in the Delaware Basin on the western side of the Permian, and is one of the largest acreage holders in the region, also announced a significant cut in operations.
The company's rig count will be cut from 22 to 11 while completion crews will be reduced from six to two or three, the company said in a statement.
Overall, Pioneer's capital budget was to be cut by 45 percent.
Robert McEntyre, a spokesperson for the New Mexico Oil and Gas Association, said the state's industry was well-positioned to emerge from the financial crisis a leader in energy production.
He pointed to New Mexico's overall rig counts, reaching 116 rigs - a record - and growing to 117 in March, an increase over March 2019's average of 105 rigs.
But until the virus is contained and the price war between Saudi Arabia and Russia is resolved, McEntyre said the industry faced uncertainty.
"Our companies are making choices to modify their short-term business plan to make sure they can survive this business environment," he said. "There's no question the ripple effect is impacting our industry and others. Because of the uncertainty, the short-term is challenging."