CAPEX spending and production growth to slow down for oil and gas producers in 2020
Monday, November 25, 2019
More of a maintenance approach is expected in 2020, as capital expenditures spending and production growth slow down, according to Forbes.
While CAPEX spending cuts are projected by producers industry-wide, this is especially so in the Appalachian Basin, which includes the Utica and Marcellus shale plays that account for nearly 40% of all U.S. gas output.
Likewise, production growth in the Appalachian Basin is expected to be at 2-3% year-on-year in 2020, which is a decrease from 8-9% growth this year.
Appalachian producers who expect to cut CAPEX spending/production:
- EQT: expects a 2020 CAPEX range from $1.3 billion to $1.4 billion — a $30% year-over-year reduction.
- CNX Resources: has cut expected 2020 CAPEX by 8-10%, with slightly lower production volumes expected.
- Range Resources: says that for 2020 the “first priority is operating the business with organically generated cash flow,” not production growth.
- Cabot Oil & Gas: expects to see 5% production growth in 2020, which is down from 7% in 2019.
Learn more: Forbes > Growth in U.S. natural gas production should slow in 2020
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How often do royalty payments come?
Depending on the company, royalty payments can arrive monthly or quarterly.
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Yes. If you plan on selling your property, notify the gas company that is leasing your land and your realtor. They will make arrangements to allow the royalty payments to transfer to a different land owner.
What are royalties?
Royalties are payments from the gas company to the landowner as part of a lease agreement. Royalties payments cannot begin until production begins. The payments are dependent upon the market price of the resource.