RPT-U.S. shale giants turn to 2016 with somber outlook

(Repeats earlier story with no changes to text)
By Ernest Scheyder
WILLISTON, N.D., Sept 10 (Reuters) - Some of the largest
U.S. shale oil producers have already begun slashing 2016
budgets, with some planning double-digit reductions starting
next January, the latest sign low crude prices CLc1 are
forcing a radical adjustment in the industry.
A rash of bleak commentaries from CEOs this week marks one
of the earliest times in a calendar year that oil producers have
laid out rough sketches for the following year's spending.
Gone, for now at least, are the high-rolling ways of an
industry that as recently as last year was flush with cash. Here
to stay, it seems, is constant belt-tightening, though
executives still think they will be able to pump more oil.
In all, North American oil companies should cut their
budgets by as much as 15 percent next year, analysts at Barclays (LONDON:BARC)
estimate.
"No cost is too small for us to scrutinize," Marathon Oil (NYSE:MRO)
Corp MRO.N Lee Tillman told the Barclays Energy Power
Conference on Wednesday. "We continue to be laser-focused on
reducing costs across all areas of our business."
Marathon, which operates in North Dakota and Texas, said it
would trim at least 18 percent of its capital budget next year -
more than $600 million - by cutting the number of wells it
fracks, among other steps. ID:nL1N11F11P
Executives at Anadarko Petroleum Corp (NYSE:APC) APC.N and Apache (NYSE:APA)
Corp APA.N hinted strongly they could take cuts of their own.
"If we do stay in this lower-for-longer scenario, we're
going to see (2016) become a very different period than we would
have anticipated," Al Walker, Anadarko's CEO, said at the
conference.
Searching for a metaphor for the downturn, Walker quoted a
friend saying: "It is going to rain for a long time. We are all
going to get wet, and a few people are going to drown."
Analysts expect the most acute pain at very small firms, not
the big independents.
Still, cuts are happening. Apache has cut 20 percent of its
staff this year and has begun looking for a joint venture
partner to help develop its Montney shale acreage in Canada, a
sign that the company is looking to spread financial risk.
ID:nL1N11F0O4
WPX Energy Inc WPX.N , which is spending $825 million to
$925 million this year, could cut that to $700 million to $800
million next year, Chief Executive Rich Muncrief said Wednesday.
Chesapeake Energy Corp (NYSE:CHK) CHK.N CEO Doug Lawler told
investors at the conference on Tuesday that maximizing liquidity
and preserving the company's ability to generate cash were
near-term priorities. ID:nL1N11E1FK
"How we deploy our cash in the next few years will be very
important," said Lawler, adding that he was prepared to cut
capital spending next year.
It is an expectation slowly becoming reality across much of
the U.S. oil industry, with many suppliers now realizing their
own bottom lines are in jeopardy.
"We believe our customers will take a conservative approach
to their 2016 budgets," Paal Kibsgaard, chief executive of
Schlumberger NV (NYSE:SLB) SLB.N , the world's largest oilfield service
provider, told the conference on Wednesday. ID:nWNAB089GX
To be sure, budget cuts don't necessarily mean that oil
output will drop, with productivity of drilling rigs and frack
crews jumping in the past two years.
Cimarex Energy Co (NYSE:XEC) XEC.N said new processes to complete
wells have helped it extract 64 percent more oil in New Mexico
than had previously been available, a staggering jump that
points to how nonchalantly the industry had spent money and
overlooked efficiencies when oil prices eclipsed $100 per
barrel, roughly $55 above current levels.
Continental Resources Inc CLR.N slashed its 2015 budget on
Tuesday and said 2016 should not be markedly different, but
still forecast that oil output will rise at least 19 percent
this year. ID:nL1N11E2F3
Only those U.S. shale producer who have heavily hedged
production for next year, and less than half of the 30 largest
did so according to a Reuters analysis, are voicing optimism and
even increasing spending. ID:nL1N10I1H3
"We'll probably be one of the only companies increasing our
capex going into 2016," said Pioneer Natural Resources PXD.N
CEO Scott Sheffield. ID:nL1N11E1KM