ConocoPhillips cuts spending 25 percent in 2016 amid oil downturn

ConocoPhillips plans to reduce capital spending by 25 percent next year to $7.7 billion to cope with a prolonged slump in oil prices.

More than half that sum will be spent in U.S. oil fields, predominantly shale formations in Texas and North Dakota, as well as the Gulf of Mexico and Alaska, the Houston-based company said in a statement on Thursday. ConocoPhillips also plans to allocate drilling capital to Malaysia, China, the North Sea and Canada.

Oil producers, rig owners and even steelmakers have been stung by the worst oil-market collapse in a generation. A worldwide glut of crude from the Middle East, Russia and U.S. shale fields has driven down oil prices since mid-2014, shrinking cash flow across the industry and spurring job cuts and project cancellations. For ConocoPhillips, that meant posting its steepest quarterly loss since 2008 in the period that ended Sept. 30.

ConocoPhillips expects to sell $1.7 billion in assets by the end of March, mostly gas fields, according to the statement. Those will be in addition to $600 million in sales that closed during the first nine months of this year. ConocoPhillips’s bigger U.S. rival, Chevron Corp., on Wednesday disclosed plans to cut 2016 spending by 24 percent to $26.6 billion.

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“Our 2016 operating plan achieves a balance between exercising flexibility to manage through the current oil and gas price downturn, and retaining optionality for medium- and long- term growth,” Chairman and Chief Executive Officer Ryan Lance said in the statement.

The statement was released before the opening of U.S. equity markets. ConocoPhillips rose 0.4 percent to $48.47 on Wednesday in New York. The stock has fallen 30 percent this year.

Excluding the impact of asset sales and supply disruptions in Libya, ConocoPhillips plans to raise output by 1 percent to 3 percent in 2016. The growth will come mostly from the start-up of an Australian gas-export project, and new output in Canada and Alaska, according to the statement.

Investment in U.S. oil production will be flat or lower next year, and diminishing output in the country in 2015 and 2016 will help re-balance the global market, Lance told reporters Monday at a conference in Doha.