Liberty Oilfield Services and ExxonMobil are the latest oil and gas production companies to announce capital expenditure cuts.

Liberty is cutting 50 percent of its planned capital spending and laying off 50 percent of its workforce, including 204 in North Dakota, according to a WARN notice filed with the state.

Exxon, meanwhile, is cutting Permian production, but ramping up production of isopropyl alcohol, a key ingredient in hand sanitizer.

Liberty and Exxon both cited the twin pressures from the COVID-19 outbreak and the Russia-OPEC price war in announcing cuts.

“These industry conditions are unprecedented,” Liberty CEO Chris Wright said. “Hence, we are taking bold, decisive action to position Liberty to survive this downturn and come out in a stronger competitive position, just as we did during the previous downturn. We are playing the long game. The next few months are likely to be the most trying as storage constraints are blowing out differentials across all basins, leading to significant interruptions in frac activity. We currently expect that industry wide activity in the second quarter will be down more than 50% from first quarter levels. We are working closely with our customers to help them deal with these interruptions. There is likely to be an increase in industry activity from second quarter levels in the later part of the year, but it will be at a reduced level from the activity before the COVID pandemic. Our top tier customers value the Liberty partnership, innovations and efficiency that enhances their operations during these challenging times. All of our key customer partnerships will be strengthened during this crisis. We are grateful for the efforts and dedication of our employees, customers and suppliers who together will navigate these troubled waters.”

In addition to the 50 percent layoffs and capex cuts, compensation for Liberty’s remaining employees has been adjusted to align with a new cost structure amid challenging market conditions. Officers have agreed to a base salary reduction of 30 percent as of April 1. That’s 10 percent more than the previously announced 20 percent. Variable cash compensation programs have also been cancelled. In all, it adds up to a 66 percent reduction in annual cash compensation compared to 2019.

Liberty will suspend its quarterly dividends until conditions warrant reinstatement, and its directors have also agreed to reduce their cash retainer for board service by 30 percent as well.

“The health and safety of people always comes first,” Liberty CEO Chris Wright said. “Liberty has been a leader in responding to the COVID-19 pandemic to protect the safety of our team, their families and all those we interact with. The COVID-19 pandemic has led to the world’s largest oil demand destruction that will reset oil and gas development activity levels over the next year or more. We have never before reduced our workforce, always charting a different path. We deeply regret that today’s circumstances necessitate that we make significant cuts to our workforce and restructure the compensation for those remaining. I commend the whole Liberty team for always going above and beyond. I want to sincerely thank the Liberty team members who are leaving for their contributions and sincerely hope that we have the opportunity to work together in the future.”

Exxon, meanwhile, will cut $10 billion from its projected 2020 capital spending, dropping it from $33 billion to $23. It will also decrease cash operating expense by 15 percent.

Most of its cuts will be in the Permian, where the company says short-cycle investments can more readily be adjusted to market conditions while preserving value for the long-term.

The company said in a media release that it will continue to monitor the situation, and exercise additional reduction options if required.

“After a thorough evaluation of the impacts of the pandemic and market conditions, we have worked closely with business partners to plan and execute capital adjustments that preserve long-term value, maximize cost efficiency, and put us in the strongest position when market conditions improve,” said Darren Woods, chairman and chief executive officer of Exxon Mobil Corporation. “The long-term fundamentals that underpin the company’s business plans have not changed — population and energy demand will grow, and the economy will rebound. Our capital allocation priorities also remain unchanged. Our objective is to continue investing in industry-advantaged projects to create value, preserve cash for the dividend and make appropriate and prudent use of our balance sheet.”

Exxon has recently shifted production to maximize components critical to the global response to COVID-19, including isopropyl alcohol, which is used to make hand sanitizer, and polypropylene, which is used for protective masks, gowns and wipes.

The company is also supporting efforts to redesign and accelerate production of reusable face masks and shields to help alleviate the current shortage of protective gear for medical workers and first responders.

“I’m proud of our company’s response efforts,” Woods said. “On our offshore platforms, in our refineries, at our lubes and chemical plants and throughout our facilities worldwide, our people are getting the job done and meeting the world’s needs for our products while protecting themselves and others. I commend our organization for their continued focus during these difficult circumstances.”

Both companies say they plan to provide a more detailed look at operating and financial conditions in their next earnings call.

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