(Reuters) – U.S. oil producer Apache Corp APA.O said on Thursday it plans to keep project spending next year flat or slightly lower than this year’s $1 billion spending rate, as the COVID-19 pandemic continues to slash global oil demand.
Oil companies continue cutting spending following pandemic-driven oil price drops. But U.S. service costs have fallen so much that Apache is sending some equipment back to work in the country’s top shale field, even as it continues to pin hopes on its offshore Suriname discovery.
The company is adding two hydraulic fracturing crews in the Permian Basin shale field in Texas to work on wells that have been drilled already but not fracked, but has no plans for a “sustained” drilling program in the field, Chief Executive John Christmann said on a call with analysts. Apache had suspended Permian Basin drilling and fracking in April after oil prices collapsed.
If U.S. oil price futures remain below $40 per barrel “materially,” Apache is prepared to reduce capital spending more, Christmann said.
Apache is prioritizing spending in its discoveries off the northeastern coast of Suriname over the Permian Basin, Christmann said. “We’re making a long-term decision because we think there’s going to be much, much greater benefit,” he said.
In Suriname, Apache and joint venture partner Total SA TOTF.PA, are nearing the award of two rigs for exploration and appraisal in 2021, the company said.
Shares rose 3.5% in trading on Thursday to $9.30. The stock is down 70% year to date.
After the market close on Wednesday, the company posted a net loss of $4 million, or 2 cents per share, for the third quarter, compared with a loss of $170 million, or 45 cents per share, a year earlier.
On an adjusted basis, it lost 16 cents per share, beating analysts’ estimates of a loss of 35 cents, according to Refinitiv data.