Statoil deepened cost cuts and halted dividend growth as Norway’s biggest energy company struggles to withstand a plunge in oil prices.

The company will deepen cuts by 30% to $1.7 billion from 2016 and lower capex to $18 billion this year from a prior target of $20 billion, the Stavanger-based company said. Some of the cuts will be onshore in the U.S. where Statoil plans to reduce drilling rigs by 20% to 25%.

The oil producer scrapped a policy of raising dividends for the time being. It proposed to pay 1.8 kroner (24 cents) a share for the fourth quarter and a “flat dividend” in the first three quarters of 2015. Today’s measures result in a cash improvement of $5 billion in total, the company said.

“It is a very competitive dividend,” Eldar Saetre, Statoil’s newly appointed chief executive officer, said in an interview on Bloomberg TV. “The flat dividend is reflective of the current environment.”

Statoil reported fourth-quarter net operating income of 9 billion kroner (US$1.2 billion), down from 43.9 billion kroner ($5.8 billion) a year earlier. The result, partly hurt by writedowns, missed the 26.3 billion kroner average among analyst estimates compiled by Bloomberg.

Statoil has followed competitors including Shell and Chevron Corp. in cutting billions of dollars in investments. The producers are seeking to protect profits after oil prices slumped by more than 50% in the second half of last year, the biggest drop since 2008.

Capex

“The miss to earnings was mainly driven by higher exploration expenses in the international segment,” Biraj Borkhataria, an analyst at RBC Capital Markets in London, said in a note to clients. The cuts to capex were slightly deeper than expected, he said.

Statoil climbed 2.2% to 142.6 kroner by the close of Oslo trading. That’s the highest price since Nov. 27.

Adjusted net income fell to 4.3 billion kroner ($565 million) from 11 billion kroner ($1.4 billion) and the company sees “organic” production growth of 2% to 2016 and 3% from 2016 to 2018.

A year ago, Statoil abandoned production-growth targets and reduced spending plans for the three years through 2016. It also started a sweeping program to lower costs, cutting employees and spurring job losses across Norway’s oil industry. Statoil is working with unions on more cuts, Saetre, who has worked for the company for 35 years, said in London today without elaborating.

Low Prices

Statoil is prepared for low oil prices for an extended period and the downturn shouldn’t have come as a surprise, said Saetre, who was named permanent CEO this week. He replaced Helge Lund, who had headed the company for a decade.

The Johan Sverdrup project can be profitable even at $40 a barrel, Saetre said. Separately, Statoil plans more cost cuts at its Johan Castberg project, Margareth Oevrum, executive vice-president for technology, told analysts in London.

Statoil’s production rose to 2.103 MMboe/d in the fourth quarter from 1.945 MMbbl a year earlier.

“The increase was mainly due to start-up and ramp-up of production on various fields and higher production regularity compared to the same period last year,” the company said.