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By Arunima Kumar
March 10 (Reuters) - Marathon Oil Corp said on Tuesday it has scaled back drilling activity and cut spending by at least 30% from a year earlier, as shale producers scramble to shore up cash and reassure investors following a crash in oil prices.
Crude prices suffered their biggest one-day rout since the 1991 Gulf War on Monday as top producers Saudi Arabia and Russia vowed to raise production even as the coronavirus outbreak slows demand, threatening to overwhelm oil markets with supply.
Marathon Oil’s shares, which tumbled nearly 47% on Monday, jumped about 32% in early trading. Oil prices jumped by around 8% on Tuesday.
“In response to the recent commodity price volatility from simultaneous supply and demand shocks, we’re taking swift and decisive action to defend our cash flow generation, protect our balance sheet, and fund our dividend,” Marathon Oil Chief Executive Officer Lee Tillman said in a statement.
Marathon Oil cut its 2020 capital spending to $1.9 billion, $500 million lower than its prior forecast.
Oil major Chevron Corp also said it was looking at ways to cut spending, which could lead to lower near-term oil and gas production.
That followed announcements on Monday by Diamondback Energy Inc and Parsley Energy Inc, two of the largest shale independents, to cut drilling to maintain cash flow above ongoing expenses.
California Resources Corp will also reduce its capital spending, the smaller oil and gas producer said late on Monday.
Marathon Oil said it will suspend all drilling in Oklahoma and scale back in the Northern Delaware region. It will also optimize development programs in the Eagle Ford and Bakken basins.
Brokerage Tudor, Pickering, Holt & Co said that while it’s good to see management act fast, the company would need another series of reductions at least equal in size to minimize outspend.
Reporting by Arunima Kumar and Shariq Khan in Bengaluru; Editing by Shinjini Ganguli and Sriraj Kalluvila