Chevron plans to slash its budget by 24 percent next year, part of a revamped strategy to rein in spending and position the energy giant to be nimble as oil prices show little sign of rising in the near future.
The dramatic cutback in spending is likely to be echoed by other oil majors who will soon release spending plans, with rival ConocoPhillips set to release its 2016 budget on Thursday.
Shares of Chevron fell 0.5 percent to $87.20 in after-hours trading. As of Wednesday's close, the stock has dropped 21 percent so far this year.
Chevron had previously signaled it could slash its budget for next year.
Plunging oil prices have cut sharply into the industry's margins this year, fueling thousands of layoffs and spreading deep unease on Wall Street about whether some energy companies can service their debt.
Chevron plans to spend $26.6 billion across the globe in 2016, with the bulk of spending on international oil and gas exploration and production projects, with the second-largest share going to projects in the United States, including shale developments in Texas.
The San Ramon, California-based company said in October it would cut 10 percent of its staff to weather the low-price storm.
Part of the decrease in spending will come as Chevron opens major new natural gas projects next year in western Australia that have been under construction for years.
"We gain significant flexibility in our capital program as we complete projects under construction," Chevron Chief Executive John Watson said in a statement.
About $4.5 billion of the 2016 budget will be spent on joint venture projects, with the bulk of that amount going to Chevron and Conoco's ChevronPhillips Chemical venture and the Tengizchevroil oil project with Kazakhstan's government and Exxon Mobil.
Chevron said about $3 billion of the budget will be spent on projects that have not yet received final investment decision, a term for areas in which the company is still investigating long-term potential.