HOUSTON, Nov 4 (Reuters) - U.S. shale operator Devon Energy Corp said on Wednesday it will slash capital spending for its exploration and production budget next year as crude oil prices remain depressed.
Crude oil has mostly lingered below $50 per barrel since July as the global market remains oversupplied. In response to weak commodity prices, U.S. producers are slashing capital expenditures, cutting jobs and only drilling acreage that has the highest margins.
Devon, which has operations in Texas’ Permian Basin and Eagle Ford fields, said it expects to spend $2 billion to $2.5 billion in 2016, down from $3.9 to $4.1 billion this year.
“To deliver maximum capital efficiency with today’s market conditions, we plan to preserve operational momentum by dynamically allocating capital to the highest returning, lowest risk development opportunities in each of our of core resource plays,” Devon Chief Executive Dave Hager told investors on a conference call.
Oklahoma City rival Chesapeake Energy Corp also said on Wednesday that its capital expenditures would be meaningfully lower in 2016, but did not provide a figure.
After the close on Tuesday, Devon reported third-quarter results that topped analysts estimates as it pumped more oil from Canada and operating expenses were lower than expected. .
Shares of Devon rose nearly 4 percent to $46.95 in midday trading on the New York Stock Exchange.
Reporting by Anna Driver; Editing by Diane Craft