BHP Billiton said Wednesday it will cut its operated U.S. onshore rigs by 40 percent amid concerns of prolonged low oil prices.
The Australia-based company will slash its U.S. onshore rig count down to 16 from 26 by June 30.
The company said its production guidance will not be impacted by the move and it expects increased productivity to raise output by 50 percent despite the cuts.
BHP’s activity in the Permian Basin and Eagle Ford shale play will be “limited to the retention of core acreage.”
The company’s dry gas development program will be reduced to one operated rig in the Haynesville shale play.
BHP will continue to develop an eastern portion of the Eagle Ford formation known as Black Hawk but said investment in that project could also be trimmed.
“We will keep this activity under review and make further changes if we believe deferring development will create more value than near-term production,” BHP CEO Andrew Mackenzie said.
BHP is currently the fourth largest publicly traded land owner in the Eagle Ford play.
The company spent $1.9 billion on its U.S. onshore drilling projects from July to August, down from $2.1 billion during the same period in 2013.
BHP also expects to take a $200 million to $250 million impairment charge tied to asset sales in Louisiana and the Permian Basin in the first half of 2015.
The company will disclose more details about its spending plans in next month’s earnings report.