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NuStar Energy Cuts 2020 Capex View, Follows No Lay-Off Rule

With oil crashing below $25 a barrel, NuStar Energy L.P. NS recently announced its downward revision of 2020 capital budget. So, the firm aims to prune capital spending this year, which is indicative of a roughly 30% or approximately $100 million cut from its prior guidance of $300-$350 million.

The oil price is persistently trending in the bear market territory since the coronavirus pandemic’s adverse impact on global energy demand. As a result, the outlook for all the industries in the energy sector business seems gloomy. Thus, energy players are restricting their operational activities by trimming capital budgets.

While the adjusted budget will help NuStar Energyride out the tough market conditions and sustain its operations, it will also assure job security to its current employees. This San Antonio, TX-based firm has a no lay-off policy by dint of which all its 1,400 personnel can retain their jobs in any kind of market disruption. This is because the firm believes that employees are the backbone of the company to rely on when combating the prevailing hardships.

Apart from cost cuts and no retrenchment policy, earlier this week, the company chairman Bill Greeheyalong with at least five other board members acquired millions of dollar worth of the partnership’s stock to boost the firm’s financial position.

With corporate insiders, such as the executives, directors or others associated with running the company expected to possess a deeper understanding of the business fundamentals than anybody else, it surely is an indicator on whom investors should depend heavily.

Importantly, NuStar Energy, which owns pipelines and storage terminals all over the country, will not only be guided by its main measures but also constantly scan the commodity price movement, further aligning itself with the capex alteration plans in response to an ambiguous price scenario.

While the coronavirus-induced bleak demand scenario inflicted maximum severity on the energy E&P players as evidenced by a flurry of capex-cut announcements from the likes of energy players including Matador Resources Company MTDR, Apache Corporation APA and Occidental Petroleum Corporation OXY among others, it now seems that even oil and gas partnerships like NuStar Energy is not immune to this volatility.

Price Performance

This Zacks Rank #3 (Hold) stock has lost 63.8% over the past month compared with 47% decline of the industry it belongs to.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Apache Corporation (APA): Free Stock Analysis Report
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