(Reuters) - Concho Resources Inc reported a bigger first-quarter loss on Thursday, hurt by a $12.6 billion impairment charge and the oil producer said it would further cut its annual spending following the rout in oil prices.
Oil and gas producers have been forced to take steps to shore up their cash reserves and make output cuts as prices fell to the lowest in decades, due to a price war between Saudi Arabia and Russia and compounded by a demand slump amid the coronavirus pandemic.
Concho said its average realized oil prices per barrel, excluding derivatives, fell 7.2% to $45.85 in the reported quarter.
The company posted a net loss of $9.28 billion, or $47.49 per share, in the quarter ended March 31, compared to a loss of $695 million, or $3.49 per share, a year earlier.
On an adjusted basis, the company earned 72 cents per share.
The charges are due to weakness in equity markets due to the virus outbreak and the substantial decline in commodity prices, the company said.
Concho now expects to spend $1.6 billion for the year, compared to its previously lowered estimate of about $2 billion and about 40% less than its original forecast. The company is also targeting $100 million in cost cuts.
“The operating environment has changed considerably since our last update, and we expect a sustained period of low commodity prices,” Chief Executive Officer Tim Leach said.
The company’s total production for the first quarter was 326,000 barrels of oil equivalent per day (boepd), lower than 328,000 boepd, a year earlier.
Concho expects 2020 oil production to be nearly flat.
Earlier on Thursday, oil and gas producer ConocoPhillips reported a first-quarter loss as it took big hits from impairments and the falling value of its stake in Canadian producer Cenovus Energy Inc.
Reporting by Shanti S Nair in Bengaluru; Editing by Shounak Dasgupta