(Reuters) - Diamondback Energy Inc (FANG.O) and Parsley Energy (PE.N) topped Wall Street profit estimates on Monday and said they plan to cut expected May oil output as the shale producers battle an unprecedented slump in oil prices and a global supply glut.
The Texas-based companies also maintained their quarterly cash dividends, which were raised in the previous quarter, as compared to some of their peers that have cut or suspended dividends to shore up cash reserves as crude prices crater.
Diamondback, which operates exclusively in the Permian basin, said it would cut 10% to 15% of expected May oil output, while Parsley expects to curtail up to 23,000 barrels of oil per day in May.
Parsley also said it has suspended all new drilling and completion activity in the near-term as crude prices fell to decades lows.
Oil and gas companies have scaled back activity, cut jobs and their annual budgets after oil prices slumped due to a month-long feud between top producers Saudi Arabia and Russia and compounded by the COVID-19 pandemic.
U.S. oil prices CLc1, which have fallen over 60% this year, were trading at over $20 on Monday. Most shale companies need prices above $40 per barrel to break even on costs at the well.
“Diamondback is prepared to operate in a lower-for-longer oil price environment, and our cost structure will prove to be a differentiator through this downturn,” Chief Executive Officer Travis Stice said in a statement.
The company also suspended its previously announced share repurchase program.
Parsley said on Monday it was temporarily suspending production, activity and unit costs outlook and further reduced its spending for 2020 to less than $700 million from less than $1 billion.
“Parsley’s 2020 activity plans will remain flexible, but we remain inflexible in our commitment to allocate incremental capital based on unhedged rates of return in prevailing market conditions,” Chief Executive Officer Matt Gallagher said.
On an adjusted basis, Diamondback reported a profit of $1.45 per share, beating analysts’ average estimates of $1.29 per share while Parsley reported a profit of 29 cents per share, two cents ahead of estimates, according to IBES data from Refinitiv.
Diamondback and Parsley also reported net losses in the first quarter from non-cash impairment charges of $1 billion and $4.4 billion, respectively.
Reporting by Shanti S Nair in Bengaluru; Editing by Arun Koyyur and Shailesh Kuber