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Quintana Energy Curtails 2020 Capex to Overcome Crude Slump
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Quintana Energy Services Inc. recently announced a reduction of 50% in capital expenditures from its original 2020 guidance to the $10-$15 million range. Moreover, the company intends to lower operating expenses for navigating the current market uncertainty. These spending cuts are over and above the company's previously announced business restructuring initiative, which is likely to conclude by June and contain annual costs by $4-$6 million.
Cost Management
Management at this Houston, TX-based oilfield service provider realized that to enhance its operating efficiency despite the challenging market conditions, it must curtail costs substantially.
Apart from trimming its capex, the company aims to decrease its operating costs through ramp-down of discretionary activities and abandoning three extra sites and two active frac spreads. Further the company’s top brass decided to retrench nearly 20% of its employees and forego up to 10-20% of the executives’ salaries in the light of the coronavirus-induced recession. These measures will help Quintana Energy save approximately $25 million of its expenses annually.
For operators in North America where oil production hit record levels, it’s more about returns now than growth. The fluctuating graph of in commodity price convinced explorers and producers to adopt a relatively cautious approach to capital expenditure programs. Further, the coronavirus-triggered lockdown dwindled oil consumption.
This shift in customer policy coupled with sluggish oil prices is likely to result in subdued demand for oilfield services and equipment, putting much pressure on the pricing. So impelled by this current market volatility, many oilfield service players including Halliburton (HAL - Free Report) , Schlumberger Limited (SLB - Free Report) and ProPetro Holding (PUMP - Free Report) are taking careful steps by limiting their capital spending.
Notably, as of Dec 31, 2019, Quintana Energy had cash and cash equivalents of $14.7 million and $37.7 million of net availability under its senior secured asset-based revolving credit facility along with total debt of $21 million. The company’s cash-holding efforts are crucial as these can slim the chances of tapping its revolving credit facility. Such solid financial position is expected to bolster its balance sheet in these turbulent times.
The above organizational rejig is anticipated to help this Zacks Rank #3 (Hold) company achieve its purpose of minimizing expenses and optimizing operational excellence by testing and supporting its staff. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Quintana Energy Curtails 2020 Capex to Overcome Crude Slump
Quintana Energy Services Inc. recently announced a reduction of 50% in capital expenditures from its original 2020 guidance to the $10-$15 million range. Moreover, the company intends to lower operating expenses for navigating the current market uncertainty. These spending cuts are over and above the company's previously announced business restructuring initiative, which is likely to conclude by June and contain annual costs by $4-$6 million.
Cost Management
Management at this Houston, TX-based oilfield service provider realized that to enhance its operating efficiency despite the challenging market conditions, it must curtail costs substantially.
Apart from trimming its capex, the company aims to decrease its operating costs through ramp-down of discretionary activities and abandoning three extra sites and two active frac spreads. Further the company’s top brass decided to retrench nearly 20% of its employees and forego up to 10-20% of the executives’ salaries in the light of the coronavirus-induced recession. These measures will help Quintana Energy save approximately $25 million of its expenses annually.
For operators in North America where oil production hit record levels, it’s more about returns now than growth. The fluctuating graph of in commodity price convinced explorers and producers to adopt a relatively cautious approach to capital expenditure programs. Further, the coronavirus-triggered lockdown dwindled oil consumption.
This shift in customer policy coupled with sluggish oil prices is likely to result in subdued demand for oilfield services and equipment, putting much pressure on the pricing. So impelled by this current market volatility, many oilfield service players including Halliburton (HAL - Free Report) , Schlumberger Limited (SLB - Free Report) and ProPetro Holding (PUMP - Free Report) are taking careful steps by limiting their capital spending.
Quintana Energy Services Inc. Price
Quintana Energy Services Inc. price | Quintana Energy Services Inc. Quote
Balance Sheet Strengthening
Notably, as of Dec 31, 2019, Quintana Energy had cash and cash equivalents of $14.7 million and $37.7 million of net availability under its senior secured asset-based revolving credit facility along with total debt of $21 million. The company’s cash-holding efforts are crucial as these can slim the chances of tapping its revolving credit facility. Such solid financial position is expected to bolster its balance sheet in these turbulent times.
The above organizational rejig is anticipated to help this Zacks Rank #3 (Hold) company achieve its purpose of minimizing expenses and optimizing operational excellence by testing and supporting its staff. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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