NEW YORK — ConocoPhillips (IW 500/22) announced a sharp cutback in spending on exploration Monday as global oil prices continued to push downward.
The U.S. oil company set capital spending in 2015 at $13.5 billion, about 20% below 2014. Development drilling spending will fall 23%, to $5 billion.
The company said the reduction reflects lower spending on major projects that are near completion and also the deferral of spending on "unconventional plays" in North America, generally shale deposits that entail more expensive production and are potentially unprofitable with the low oil prices.
"We are setting our 2015 capital budget at a level that we believe is prudent given the current environment," ConocoPhillips CEO Ryan Lance said in a statement. "We have significant identified inventory in the unconventionals, where we also retain a high degree of capital flexibility."
Global oil prices have fallen more than 30% since June as global consumption has grown very slowly while productions has jumped.
Output of oil and gas from shale and other unconventional deposits in North America has been a major contributor to the global glut. At the current $64 a barrel price for the U.S. crude benchmark, West Texas Intermediate, many shale fields could be unprofitable to develop.
ConocoPhillips said that despite the cutback in exploration and production spending, the company will be able to increase production next year by about 3%, thanks to new fields just coming on line.
Copyright Agence France-Presse, 2014