​Capex budget cuts continue with European majors

Equinor, OMV and Eni joined the ranks of the world’s major producers this week to announce a cut in their capital spending budgets for 2020, in the wake of the oil price crash and the COVID-19 pandemic.

These European producers, according to Evaluate Energy guidance data, are joining a host of North American majors that have enacted similar budget cut plans for the coming year.

Norway’s Equinor is cutting over $3 billion from its 2020 plans. $2.4 billion of this is related to capex, representing a 20% cut from original plans, while $700 million is also being cut from planned operating expenses.

Austria’s OMV is now planning a €500 million reduction (20%) in capital spending and a further reduction of €200 million in opex cuts. The company also announced postponements of around €1.5 billion in new projects to 2022.

Italy’s Eni is cutting €2 billion (25%) off its 2020 capex plans and is set to reduce opex by €400 million. The company is also planning to cut €2.5-€3 billion off its 2021 plans.

Below these have been combined with some selected budget cuts announced this month by major U.S. upstream players.

Evaluate Energy’s guidance tool is vital for keeping up to date with every North American budget cut or guidance announcement, find out more here.

These cuts are all, of course, in the wake of the oil price crash destroying margins worldwide and demand for oil taking a similar nosedive in the wake of COVID-19, what with latest figures suggesting that a quarter of the world’s population is now on lockdown and/or working from home. IEA is expecting global oil demand is expected to fall year-on-year, which would be the first time this had happened since 2009.

Clearly the upstream industry is facing major challenges and identifying the companies most likely to ride out the storm is vital for investors.

Evaluate Energy’s hedging database works hand in hand with our robust financial and operating database and our guidance product to help you pinpoint those companies that are best protected against this recent onslaught of outside market pressures.

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