- ARC Resources (TSX:ARX) is cutting its 2020 capital budget by 40 per cent to C$300 million
- The company is also cutting its monthly dividend from $0.05 per share to $0.02 and its quarterly dividend from $0.06 to $0.05
- These reductions come after COVID-19 fears and an oil price drop hit the oil and gas industry hard this week
- Since Monday, the Brent Crude and The West Texas Intermediate have both fallen by around 20 per cent
- Arc Resources (ARX) was up 13.01 per cent, with shares trading for $3.56 and a market cap of $1.2 billion
ARC Resources (TSX:ARX) is reducing its 2020 capital budget, after a poor week for oil and gas companies.
The company’s capital spending budget has been reduced by 40 per cent, to C$300 million. The company is also cutting its monthly dividend from $0.05 per share to $0.02 and its quarterly dividend from $0.06 to $0.05.
ARC’s CEO, Terry Anderson, believes these measures are necessary to ensure the company’s financial stability.
“The rapid decline in global commodity prices has created a significant headwind for energy producers.
“We feel it prudent to adjust our spending levels in order to protect our balance sheet, and to ensure the sustainability of our business based on our current understanding of existing business conditions,” he said.
Anderson went on to say that ARC hopes to emerge from the recent market decline in a strong financial position.
Over the last few weeks, ARC’s share price has more than halved, losing over $1 billion in market cap. The economic instability has been caused by ongoing COVID-19 fears and the recent oil price drop.
Common oil-price benchmarks, the Brent Crude and The West Texas Intermediate, have both fallen significantly in the last week. This followed Saudi Arabia’s decision to uncap the country’s oil production.
After recovering slightly since Monday, the Brent Crude and West Texas Intermediate are currently down about 20 per cent.
ARC Resources is a conventional oil and gas company, which has been operating since 1996. They currently operate out of two locations in Alberta.
Arc Resources (ARX) was up 13.01 per cent, with shares trading for $3.56 at 9.38am EST.