HOUSTON (Reuters) - Hess Corp (HES.N), a U.S. oil company with operations in North Dakota's Bakken Shale, said on Tuesday that it planned to cut capital spending by 40 percent this year, the latest company to scale back due to the sharp downturn in crude prices.
The New York-based company plans to spend $2.4 billion in 2016, down from $4 billion last year.
The move comes on the heels of industry-wide cuts last year that ranged from about 20 percent to 50 percent. Despite those steps, many operators managed to lift output as they devised new ways to coax more oil from rock.
Hess and many peers have been known to use derivatives to hedge prices on a chunk of their output, but the budget cut comes as the energy industry grapples with how best to respond to crude prices that are lingering around $30 per barrel, a level where many oil and gas producers cannot profitably operate, according to numerous analysts.
At that level, U.S. oil companies are expected to slash 2016 budgets by an average of 38 percent, according to a report from Bernstein Energy analysts
Halcon Resources Corp (HK.N), which operates in North Dakota and Texas, last week slashed its 2016 budget by 55 percent, saying it will operate only one drilling rig this year and ramp down production in response to low prices.
On the other end of the spectrum, Pioneer Natural Resources (PXD.N), which is known for its aggressive hedging program, said earlier this month it would spend between $2.4 billion and $2.6 billion this year.
Though Pioneer will fund its 2016 budget in part from a $500 million asset sale, the modest increase from $2.2 billion in 2015 makes the company a relative outlier at a time when most companies are trimming capex by amounts similar to last year's drastic cutbacks.
Despite its own cut, Hess will continue to invest in growth projects, Chief Operating Officer Greg Hill said.
"We have significantly decreased our 2016 capital and exploratory expenditures, and we plan to reduce activity at all of our producing assets," he said.The company forecast average 2016 production at between 330,000 and 350,000 barrels of oil equivalent per day, unchanged from the outlook it provided in October.
Hess is slated to report fourth-quarter earnings on Wednesday.
Shares of Hess, which have fallen 51 percent in the last year, were up 3 percent at $35.40 in afternoon trading.
Reporting by Anna Driver and Ernest Scheyder; Editing by Lisa Von Ahn and Andrea Ricci