Oil and gas companies drastically cutting production as coronavirus pandemic takes hold

Concern over possible closures loom
Posted at 10:08 PM, Mar 18, 2020
and last updated 2020-03-19 02:06:49-04

DENVER — In a time of economic turmoil, gas prices are keeping the money we desperately need in our pockets.

"We went down $0.11 week-to-week. We will probably go down another $o.11 and then probably another $0.11 before things begin to flatten," said Skyler Mckinley, director of public affairs for AAA.

McKinley believes it's not a matter of how much will gas drop. Instead, we should be asking, 'How long will it last?'

"If these prices are sustained at this low for a long while you might see the closure of some American production, which then is going to drive the cost up," McKinley said of the market outlook.

Oil and gas companies located in Colorado are already seeing their stock prices plummet.

Dan Haley, president of Colorado Oil and Gas Association (COGA), told Denver7 it's uncharged territory.

“The global economy sits on the brink, given the pandemic we’re facing, and our leaders need to be doing everything they can to make sure companies across the board aren’t going bankrupt and laying off thousands of Coloradans," Haley said. "Whether it’s an oil and gas operation or the neighborhood restaurant down the street, the best thing our state can do is identify areas where support is possible, and to make sure whatever actions they take, they don’t unjustifiably harm Colorado businesses or working families."

Several companies that are either based in Colorado or have business in the state have cut production.

"PDC (Energy Inc.) has said that they are going to reduce production and capital spending in Colorado, which is primarily going to be in Weld County, but again it’s the entire state by 25%," Weld County Commissioner Barbara Kirkmeyer said. "Occidental (Petroleum) is reducing their spending in the Rocky Mountain region, again primarily Weld County, in the state of Colorado by over 40%."

Kirkmeyer calls COVID-19 the third strike for the oil and gas industries. The first being SB19-181 and the second being the Russia, Saudi Arabia price war.

"So, here’s who is getting hit, it’s not Weld County necessarily. We planned for it, we budgeted for it, we will be fine. It’s the special districts, like school districts, who rely on tax revenue, they’re getting hit, fire districts, water and sanitation districts," Kirkmeyer explained.

Liberty Oilfield, a Denver-based company, also announced last week they would be reducing executives base salaries by 20%. Part of the company's statement said it was due "in response to an uncertain economic environment".