U.S. oil producer Anadarko Petroleum Corp posted a larger-than-expected quarterly loss on Monday and said it would cut its 2017 capital budget by $300 million because of depressed oil prices, the first major U.S. oil producer to do so.
Anadarko and the rest of the U.S. shale oil industry have been grappling with how to conserve cash and maintain growth opportunities even as crude prices have slumped since January.
Many Wall Street analysts had asked U.S. producers to consider cutting budgets, and it was unclear which company would do so first. Anadarko, the first major U.S. producer to report quarterly results, ended that guessing game.
Several U.S. shale producer executives had said last month that they had flexibility in spending, and would not invest cash blindly.
Shares of Houston-based Anadarko fell 3.8 percent to $42.55 in after-hours trading on Monday. The company is slated to discuss the results on a Tuesday morning conference call with investors.
"The current market conditions require lower capital intensity given the volatility of margins realized in this operating environment," Anadarko Chief Executive Al Walker said
in a statement.
Anadarko in March had forecast 2017 spending of $4.5 billion to $4.7 billion.
Anadarko, which operates in the U.S. Gulf of Mexico as well as Colorado and other U.S. shale regions, South America and Africa, posted a third-quarter loss of $415 million, or 76 cents per share, compared to $692 million, or $1.36 per share, in the year-ago period.
Excluding one-time items, Anadarko lost 77 cents per share. By that measure, analysts expected a loss of 36 cents per share, according to Thomson Reuters
Average daily sales volumes, the physical amount of crude and natural gas sold, fell 20 percent to 631,000 barrels of oil equivalent per day (boe/d).
Anadarko in May closed more than 3,000 wells in Colorado after a fatal home explosion was linked by local authorities to a well owned by the company.
Given those closings, Anadarko said it was trimming its 2017 production forecast to 644,000 boe/d, a 2 percent cut.
Anadarko said in the earnings release that it was in the final stages of securing operator control of 70 percent of acreage that was previously part of a 10-year-old joint venture with Royal Dutch Shell (RYDAF)
Executives are slated to give more details on disposition of the Permian acreage on the Tuesday conference call.
Reporting by Ernest Scheyder