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Devon Energy plans to cut capital spending next year

Published 2015-11-04, 01:01 p/m
© Reuters. Devon Energy plans to cut capital spending next year
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HOUSTON, Nov 4 (Reuters) - U.S. shale operator Devon Energy (N:DVN) 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 (N:CHK) 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.

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