May 11 (Reuters) – U.S. shale producers Continental
Resources Inc and Callon Petroleum Co on Monday
joined their peers in cutting production to cope with a rout in
oil prices as the coronavirus crisis saps demand for fuel.
A month-long oil price war between Saudi Arabia and Russia
and the economic fallout from the pandemic caused a historic
drop in oil prices and sent shockwaves through the North
American energy sector, forcing producers to drastically cut
their spending and scale back on activity.
Continental said on Monday it has cut 70% of its May oil
output, more than double of what it had planned earlier, and at
its current rate, it expects to spend between 3% and 5% below
the revised annual budget of $1.2 billion.
The company, which has slashed its budget and suspended its
quarterly dividend, 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.
Reuters reported last month that Continental stopped all
drilling in North Dakota, shut in wells and issued a force
majeure notice, an action typically reserved for situations out
of a company’s control, such as natural disasters.
Continental, which operates the Bakken shale spread across
North Dakota and Montana and the STACK and SCOOP plays in
Oklahoma, also withdrew its full-year outlook and said it was
suspending further guidance due to current market conditions.
Separately, Callon said it has 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, the company said.
Callon also suspended its full-year outlook and said it has
further reduced activity, including halting all completion
activity in April and moving to only one active drilling rig by
Reuters reported in April that Callon had hired advisers to
restructure its debt pile after the plunge in energy prices
soured its acquisition of rival Carrizo Oil & Gas Inc.
(Reporting by Arunima Kumar and Shanti S Nair in Bengaluru;
Editing by Ramakrishnan M.)