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Oct 29 (Reuters) - U.S. oil producer Marathon Oil Corp on Thursday said it is slashing its quarterly dividend 76 percent and further reducing capital expenditures to preserve cash on hand as it tries to withstand a prolonged crude price slump.
Crude prices have lingered below $50 a barrel for weeks, a level that renders some shale oil drilling unprofitable. To free up needed cash, independent oil and gas companies continue to cut spending, slash jobs and in some cases cut or suspend quarterly payouts.
In July, Chesapeake Energy Corp, the second-largest U.S. natural gas producer, said it was suspending dividend payments.
"We believe the revised dividend appropriately addresses the uncertainty of a lower for longer commodity price environment," Marathon Oil Chief Executive Lee Tillman said in a statement.
Marathon's dividend cut to 5 cents per share from 21 cents per share is expected to increase annual free cash flow by more than $425 million, the Houston-company said.
The company is also planning to divest at least $500 million of non-core assets and said it expects 2015 capital spending to be reduced by $200 million to $3.1 billion.
Next year, Marathon expects to spend $2.2 billion, a decline of 29 percent, a figure that would allow the company to keep oil and gas output flat.
Shares of Marathon Oil rose 48 cents, or nearly 3 percent, to $18.16 in late morning New York Stock Exchange trading. (Reporting by Amrutha Gayathri in Bengaluru and Anna Driver in Houston; Editing by Savio D'Souza and Marguerita Choy)