What happened

Shares of Apache (APA 0.56%) nose-dived a stunning 83.2% in March, according to data provided by S&P Global Market Intelligence. Crude oil prices crashed last month, which forced Apache to take drastic action to shore up its financial profile. 

So what

The U.S. oil price benchmark, WTI, plummeted 54% last month, pushing it down 66% for the quarter to right around $20 a barrel. Driving that downdraft was the collapse of a market-support agreement between Russia and OPEC, causing a price war amid a massive disruption in the global economy because of the COVID-19 pandemic. 

An oil field at sunset.

Image source: Getty Images.

That devastating plunge in oil prices forced Apache to cut its capital spending plan from a range of $1.6 billion to $1.9 billion to between $1.0 billion and $1.2 billion, requiring it to stop all drilling in the Permian Basin. Apache also slashed its dividend by 90%, which will save it $340 million per year, and it plans to shave $150 million off its operating costs. The company intends to use these savings to bolster its balance sheet as it prepares for $937 million of debt maturities between next February and January of 2023. 

Those looming debt maturities caused credit rating agency S&P Global to downgrade Apache's debt to junk. That had an immediate impact on the company because it had to post letters of credit totaling $650 million, guaranteeing it would meet its obligations to retire old oil wells in the North Sea once they stop producing. In addition, it will be harder and costlier for the company to borrow money.  

Now what

Apache quickly slashed spending last month after crashing crude prices put pressure on its balance sheet. The company has continued cutting costs this month, doubling its operating-expense savings estimate to $300 million. Apache hopes that these reductions will enable it to stay afloat by giving it the ability to meet its upcoming debt maturities.