UPDATE 1-Precision Drilling expects lower capital spending in 2015

Mon Dec 8, 2014 7:09am EST
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Dec 8 (Reuters) - Precision Drilling Corp said it expected 2015 capital spending to be 44 percent lower than this year's already lowered budget as a steep fall in oil prices threaten to render exploration and development project uneconomic.

Brent crude oil, which has fallen nearly 40 percent since June, fell to a new five-year low on Monday on forecasts that oversupply would keep building until next year after OPEC decided not to cut output.

Precision Drilling, Canada's largest oil and gas drilling contractor, said it expected to spend C$493 million ($430 million) next year. It also lowered its 2014 capital spending plans by C$23 million to C$885 million.

The company's capital plan includes the completion and deployment of 16 previously announced rigs.

"Following the delivery of the 16 rigs, I expect our rig building activity will be idled until we see an improved commodity price environment and rising customer new build demand," Chief Executive Kevin Neveu said.

Global oil and gas projects worth more than $150 billion are likely to be put on hold next year, Reuters reported on Thursday, citing data from Norwegian consultancy Rystad Energy.

Diamond Offshore Drilling Inc said in October it had to contract two new rigs at a much lower rate than its previous lease. Atwood Oceanics Inc delayed delivery of two new drill ships by six months.

Hercules Offshore Inc said it would cut 15 percent of its jobs and remove four rigs from its fleet, while Transocean Ltd expects to retire additional rigs.

Precision, which operates in North America, Asia, Latin America and North Africa, also said it divested its U.S. coil tubing assets for C$44 million. ($1 = 1.1443 Canadian dollars) (Reporting by Ashutosh Pandey in Bengaluru; Editing by Don Sebastian)