(Reuters) - U.S. oil refiner Marathon Petroleum Corp (MPC.N) on Tuesday cut spending by 30% and detailed other measures to reduce costs, as widespread lockdowns to curb the spread of the COVID-19 pandemic pummel demand for oil and gas.
Stay-at-home orders to contain the pandemic have decimated travel, cutting worldwide demand for oil at a time when the market is already over supplied.
With U.S. oil prices now down 70% for the year, companies have rushed to cut their budgets and are finding ways to save cash in order to survive through the downturn.
Marathon, which last month said it will defer or delay some expenses, expects total capital spending to decline by $1.4 billion, reducing its budget for the year to $3 billion. It estimated operating expenses to be $950 million lower in 2020.
Investors are likely to take a positive view of the spending cuts, analysts at Credit Suisse wrote in a note, adding that the measures were better than the brokerage’s estimates.
Marathon’s shares rose around 5% in premarket trading, as the company also posted a quarterly adjusted loss of 16 cents per share that was much smaller than analysts’ average estimate of 31 cents, according to Refinitiv IBES data.
Marathon forecast sharply lower refining throughput for the second quarter as it temporarily idled some facilities to save costs amid little demand for refined products.
The company expects second-quarter throughput, defined as the amount of crude oil processed by a refinery, to be around 2.13 million barrels of oil per day (bopd), down from 3.1 million bopd a year earlier.
Net loss attributable to the largest U.S. oil refiner was $9.2 billion, or $14.25 per share, in the first quarter, as it booked $12.4 billion in charges related to inventory writedowns and goodwill impairment.
Marathon’s rivals Valero Energy Corp (VLO.N) and Phillips 66 (PSX.N) reported losses for the first three months of the year as they also wrote down the value of their inventories and took one-time charges because of the oil crash.
Reporting by Shariq Khan in Bengaluru; Editing by Shinjini Ganguli and Maju Samuel