(Reuters) - U.S. shale producers Continental Resources Inc and Callon Petroleum Co on Monday joined their peers in cutting production as the coronavirus crisis slashed oil prices and demand for fuel.
The historic drop in prices last month has North American oil companies on course to cut roughly 1.7 million barrels per day, or 13%, by midyear, according to a Reuters analysis of U.S. state and company data.
Continental, controlled by oil and gas entrepreneur Harold Hamm, cut 70% of its planned May oil output, executives said, more than double previously forecast. It expects to spend about 5% less than its revised annual budget of $1.2 billion.
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Continental has halted entering into sales contracts for its June oil production, CEO William Berry told analysts Monday on a conference call.
“We intend to continue curtailing our oil production, selectively targeting sales that maximize our natural gas production,” Berry said. The oil halt will “defer our production” until higher oil prices return.
Reuters reported last month that Continental had stopped all drilling in North Dakota and issued a force majeure notice, an action typically reserved for situations out of a company’s control, such as war or natural disasters, saying it could not deliver to customers.
Hamm, an ally of U.S. President Donald Trump, has called for a ban on Saudi imports and an investigation into last month’s fall in U.S. crude futures to minus $37 a barrel. Last month Hamm called for investigations into “illegal dumping of crude oil” by Saudi Arabia and Russia.
On Monday Hamm said the Saudis “can’t do this in the future” and referred to U.S. military support to the kingdom. “We’re not going to be protecting them militarily and have them try to take this industry down,” Hamm said.
Trump has said during the crisis that unless OPEC started cutting production he would be powerless to stop Congress from moving to withdraw U.S. military backing from Saudi Arabia. The Saudi embassy in Washington did not respond to requests for comment at the time.
Continental lost $186 million in the most recent quarter, its worst quarterly performance in four years, and suspended its dividend and financial forecasts.
Its shares fell 7% to $14. They are down 59% since the beginning of the year.
The company said it would reduce current operating rigs to four from five by the end of 2020, marking an 80% reduction from the beginning of the year.
Separately, Callon said it had shut in about 1,500 gross barrels per day (bpd) through April and expects it to reach over 3,000 gross bpd during May. June volumes are currently under evaluation.
Callon suspended its full-year outlook and said it has halted all completion activity in April and was moving to only one active drilling rig by mid-May.
Reuters reported in April that Callon had hired advisers to restructure its debt after the oil plunge soured its takeover of Carrizo Oil & Gas.
Reporting by Arunima Kumar and Shanti S Nair in Bengaluru; additional reporting by Gary McWilliams in Houston; Editing by Sriraj Kalluvila and Grant McCool
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