ConocoPhillips (NYSE: COP) further lowered its capital budget for 2016 and slashed its quarterly dividend as a relentless fall in crude oil prices takes a toll on the largest U.S. independent oil and gas company.
Shares of ConocoPhillips, which also reported a bigger-than-expected quarterly loss, were down 4% at $37 in light premarket trading on Feb. 4.
Global crude oil prices have dropped about 70% from their 2014 high of over $100 barrel, eroding profitability at nearly all oil producers.
ExxonMobil Corp. (NYSE: XOM), the world's largest publicly traded oil company, reported its smallest quarterly profit in more than a decade on Feb. 2.
With oil prices now hovering at about $30 barrel, producers are slashing investments in new wells and projects, triggering another large wave of spending cuts.
ConocoPhillips on Feb. 4 lowered its 2016 capex target by 17% to $6.4 billion, and its operating cost forecast by 9 percent to $7 billion.
The reduction comes less than two months after the company outlined its spending plans for the year.
ConocoPhillips also slashed its quarterly dividend to 25 cents per share from 74 cents per share.
"While we don't know how far commodity prices will fall, or the duration of the downturn, we believe it's prudent to plan for lower prices for a longer period of time," Chief Executive Ryan Lance said in a statement.
The dividend cut and lowered spending will help ConocoPhillips add $4.4 billion to net cash flow in 2016, he said.
The company said it expects 2016 production to be unchanged from 2015, excluding the impact of asset sales.
The company produced 1.589 million barrels of oil equivalent per day (MMboe/d) in 2015.
ConocoPhillips forecast current-quarter output of 1.54-1.58 MMboe/d, lower than the 1.599 MMboe/d it produced from continuing operations in the fourth quarter.
The company's net loss widened to $3.5 billion, or $2.78 per share, in the fourth quarter ended Dec.31, from $39 million, or 3 cents per share, a year earlier.
Excluding a $2.7 billion non-cash impairment charge and other items, loss was 90 cents per share, bigger than the average analyst estimate of 65 cents, according to Thomson Reuters.
Up to Wednesday's close of $38.63, Conoco's shares had slipped about 40% over the past 12 months, steeper than a more-than 25% fall for the Dow Jones U.S. Oil & Gas Index.
Recommended Reading
What's Affecting Oil Prices This Week? (April 15, 2024)
2024-04-15 - While concerns about the stability of oil supply are increasing, Stratas Advisors does not expect oil supply to be disrupted – unless there is further escalation in the Middle East.
Paisie: Crude Prices Rising Faster Than Expected
2024-04-19 - Supply cuts by OPEC+, tensions in Ukraine and Gaza drive the increases.
What's Affecting Oil Prices This Week? (April 22, 2024)
2024-04-22 - Stratas Advisors predict that despite geopolitical tensions, the oil supply will not be disrupted, even with the U.S. House of Representatives inserting sanctions on Iran’s oil exports.
What's Affecting Oil Prices This Week? (April 8, 2024)
2024-04-08 - Stratas Advisors says geopolitics are providing a boost for oil prices as conflicts escalate–and while crude oil and oil products continue to flow, the possibility of disruption is increasing.
What's Affecting Oil Prices This Week? (April 29, 2024)
2024-04-29 - Stratas Advisors says even with the reported drawdown in U.S. crude inventories, the price of Brent crude oil remains below the upward channel that had been in place since January of this year.