Apache (APA) - Get Report shares were tumbling in premarket trading Thursday by 16.4% to $6.90 after the oil and gas exploration company slashed its spending forecast for the year and reduced its quarterly dividend by 90%.
The Houston-based company said it now expects its 2020 capital investments to range between $1 billion and $1.2 billion, down from an earlier forecast of $1.6 billion to $1.9 billion.
The company cut its quarterly dividend to 2.5 cents a share from 25 cents. Apache said it will use the $340 million of cash retained from the dividend reduction to "further strengthen its financial position."
Apache said it will reduce its Permian rig count to zero over the coming weeks to limit exposure to short-cycle oil projects. The company is also planning to reduce activity in Egypt and the North Sea.
The company said it will proceed as planned with a third exploration project in Suriname, upon the conclusion of operations at the Sapakara West-1 exploration well.
Apache said it "has ample liquidity" through its $4 billion undrawn revolver and flexibility to manage $937 million in bonds maturing between February 2021 and January 2023.
Oil prices fell sharply earlier this week after OPEC talks collapsed as cartel leaders and non-member allies such as Russia failed to deepen a pact on production cuts and also allowed their current agreement to expire.
“We are significantly reducing our planned rig count and well completions for the remainder of the year, and our capital spending plan will remain flexible based on market conditions,” John J. Christmann IV, CEO and president, said in a statement. “We are also further reducing operating and overhead costs as we continue to implement our corporate redesign program, which began in the fall of 2019.”