In response to the “uncertain economic environment,” Denver-based Liberty Oilfield Services Inc on Friday asked all members of the executive team to take a 20% cut to base salaries beginning in April.

The completions services specialist, which works across the North American onshore, is dealing with “unprecedented” conditions, CEO Chris Wright said. Over the past week, many of the largest exploration and production companies headquartered in the United States have announced they are cutting capital expenditures (capex) on the heels of a global oil price war and declining demand from the effects of the Covid-19 pandemic.

“As leaders of this organization, the executive management team unanimously elected to reduce base salaries by 20% in addition to significant variable compensation reductions for the foreseeable future, as we evaluate all actions to preserve the quality of service for our customers, returns for our investors and maintain our commitment to Liberty culture,” Wright said.

Management “is working diligently with our partners to help them manage their businesses in an uncertain environment,” the CEO said. The company’s “prudent approach to investment and a strong balance sheet will allow us to navigate the current environment and position us favorably as conditions improve.”

U.S. publicly held E&Ps stepping up since last Monday to announce cutbacks in 2020 capex as of Friday included Apache Corp., California Resources Corp., Contango Oil & Gas Co., Devon Energy Corp., Diamondback Energy Inc., Marathon Oil Corp., Matador Resources Co., Murphy Oil Corp., Noble Energy Inc., Occidental Petroleum Corp., Ovintiv Inc., Parsley Energy Inc., PDC Energy Inc., Ring Energy Inc., Northern Oil and Gas Inc. and QEP Resources Inc.

The pullback is likely to continue as analysts calculate the impact on global fuel markets because of reduced travel.

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Rystad Energy on Thursday updated most of its oil production estimates, with the forecast for global oil now projected to decrease by 0.6% this year, or 600,000 b/d year/year. Total oil demand in 2019 was about 99.8 million b/d; it is now projected to decline to 99.2 million b/d in 2020, and takes into account the quarantine lockdown in Italy, cancellations of airline travel, as well as the partial travel ban announced by President Trump last Wednesday.

On Friday, oil prices were recovering somewhat along with the stock market as optimism increased for passage of a U.S. stimulus package, Rystad senior market analyst Paola Rodriguez-Masiu said. However, the Organization of the Petroleum Exporting Countries has canceled a joint technical committee meeting scheduled Wednesday (March 18), sending “a very clear signal that neither Russia nor Saudi Arabia are willing to blink just yet” in their price war.

“Instead, a stronger ”pump-at-will’ attitude is emerging as the Saudis try to build a more appealing case to bring Russia back to the negotiating table. The Saudis know that if prices sink into the $20s there is a higher chance to reach a compromise within the next three months, but if prices remain in the high $30s a deal will be more difficult. Moreover, we find that it is unlikely that Russia is willing to renegotiate cuts until the full impact that the coronavirus will have in demand becomes clearer.”
Rystad estimates that Russia could bring online less than 500,000 b/d more in the short term, while the Saudis could add about 1.5 million b/d. Russia has fiscal breakeven oil prices that are about half of that for the Saudis, according to the firm.

“Moscow said on several occasions that it can withstand oil prices of $30 for six-to-10 years,” Rodriguez-Masiu said. “In addition, Russian floating currency makes Russia more effective to control prices drops, as it acts as a shock absorber.”

Protecting employees who work in the energy industry has become a paramount concern too, as Equinor SA, Repsol SA and Royal Dutch Shell plc recently indicated some staff may have been exposed to Covid-19. The American Petroleum Institute also has published information about safety and health concerns.