- Oil and gas company, NuVista Energy Ltd (TSX:NVA) is reducing its capital spending by 25 per cent to C$240 million
- The company hopes the reduction will mitigate the recent oil price crash, caused by Saudi Arabia uncapping production and ongoing COVID-19 fears
- NuVista has previously hedged 60 per cent of its production at $71 a barrel, now a significant premium to the market price
- It has also implemented a COVID-19 strategy to prevent the outbreak directly affecting operations on-site
- NuVista Energy Ltd (NVA) was down 31.75 per cent, with shares trading for $0.43 and a market cap of $97 million
NuVista Energy Ltd (TSX:NVA) is yet another oil company adjusting its 2020 outlook, after a steep oil-price drop hit the industry last week.
The company will now manage its 2020 spending down 25 per cent to C$240 million. This will allow NuVista to cope with a new West Texas Intermediate price, which is hovering around $41 a barrel.
Luckily, the company has previously hedged 60 per cent of their oil production at $77. NuVista was also quick to point out that positive changes in the natural gas pricing will partially offset the drop in oil.
Nuvista has also reduced its expected oil production to around 55,000 barrels per day. This is only a marginal decrease, as 57,000 barrels per day was the bottom end of its previous guidance.
However, this slight reduction could compound significantly over the whole year and be further impacted if the oil price remains low.
To mitigate the risk of COVID-19 infections at its operations, all essential staff have been given work-from-home technology. Furthermore, in the event of an outbreak, NuVista will implement minimum staff levels to manage its assets at a reduced risk.
The company’s previous 2020 guidance was released less than two weeks ago, which shows just how much the last fortnight has affected the industry.
Even before the drop last week, the company stated in its outlook that oil prices were already a financial difficultly. Oil benchmarks have been trending down for the last 12 months.
However, when Saudi Arabia uncapped production last week, the increased supply dropped the Brent Crude and the WTI by around 25 per cent.
NuVista Energy Ltd (NVA) was down 31.75 per cent, with shares trading for $0.43 at 12.51pm EST.