BHP said it would pare the number of drilling rigs it is using to 16 from 26 by June 2015 and would update the market on its revised shale drilling budget, originally set at $4 billion for this financial year, in February.
It plans to focus on drilling in the liquids-rich Black Hawk basin, while cutting back in the Permian and Hawkville acreage.
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"We will keep this activity under review and make further changes if we believe deferring development will create more value than near-term production," Chief Executive Andrew Mackenzie said in a statement.
The Anglo Australian giant, which differentiates itself from its mining rivals by owning oil and gas assets, said it has spent $1.9 billion on onshore drilling so far this year.
Some analysts had predicted it may cut shale spending in half following a 40 percent slump in oil prices since late November.
"BHP's announcement to cut the rig count by 10 down to 16 is roughly in line with general expectations given the precipitous fall in oil and natgas prices as well," said Jeremy Sussman, global mining analyst at Clarkson Capital Markets in New York.
BHP also flagged it would book writedowns of up to $600 million after tax following the sale of some of its onshore petroleum assets and the failed sale of its Nickel West business.
It will also book a tax charge of $809 million tied to Australia's now-repealed mining profits tax.
BHP said it was sticking to its plan to spin off its aluminum, manganese, silver and some nickel and coal assets into a new company, South32, even as some of these assets are enjoying improving prices.
The move will limit Mackenzie's ability to return capital to shareholders in the near term, but analysts expect it to stick to its promise to pay a steady or higher dividend every six months.
"BHP has made it clear they will cut capex where needed in order to maintain their progressive dividend," Sussman said.
Arch rival Rio Tinto has said it is on track to "materially increase" returns to shareholders starting in February, despite a 50 percent plunge in prices of iron ore over the past year.
BHP's iron ore output climbed 16 percent to 56.35 million tonnes in the December quarter. It reaffirmed it would boost annual output by 11 percent in the year to June 2015 to 225 million tons.