Anadarko Petroleum's capital expenditures in 2015 will be significantly lower than last year because of the recent collapse in crude oil prices, the exploration and production company's CEO told investors on a conference call on Tuesday.
"We see ourselves in a period here of trying to build value, maintain flexibility and not grow in a low commodity price environment that we see as less than attractive," Chief Executive Al Walker said.
Anadarko will release its capital plan and outlook on March 3. In 2014, Anadarko spent about $9.3 billion, according to its fourth-quarter earnings report.
Last month oil prices tumbled to the lowest level in six years, hit by a world supply glut and weak demand. U.S. oil companies have responded by cutting capital expenditures 20 percent to 40 percent in a bid to conserve cash.
Stephen Richardson, an analyst at Deutsche Bank, said in a note to clients that he expects Anadarko to announce a 2015 budget of about $6.5 billion.
Walker also said he expects oilfield service costs to fall, but big reductions are not likely until the end of the year or early next year as companies continue to honor current contracts.
"We think that $70 (a barrel) gives you the same economics as $90 (a barrel) with a 20 percent reduction in service costs," said Walker. "And I think that is the way that our industry is going to have to look at things."
If there was an extended period of low oil and gas prices, Anadarko said it would cut capital expenditures by releasing rigs and not completing wells that have been drilled.
After the close of trading on Monday, Anadarko reported fourth-quarter results that fell short of Wall Street expectations, as fallout from the collapse in crude oil prices offset a 6 percent increase in output.
Anadarko's net loss in the quarter was $395 million, or 78 cents per share as the company wrote down the value of some oil and gas properties.
On Tuesday, shares of Anadarko were up 2.1 percent to $84.51 in late-morning trading, helped by a 3 percent gain in crude oil futures.