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Chesapeake Energy CEO Doug Lawler. Image courtesy of Chesapeake/Youtube.

Chesapeake Energy said Tuesday it will cut its 2015 operated rig count by 55 percent.

The Oklahoma-based company plans to operate 25 to 35 rigs in 2015, a 55 percent drop from an average of 64 rigs in 2014.

The company will also reduce its 2015 capital budget, including capitalized interest of $500 million, to between $3.5 billion to $4.0 billion for 2015.

Chesapeake’s initial guidance for its 2015 capital budget was set at between $4 billion to $4.5 billion.

The company intends to spud 520 wells and connect 650 gross operated wells to sales in 2015, down from 1,175 spuds and 1,150 wells in 2014.

Chesapeake has lowered its 2015 production target to between 231 to 236 million barrels of oil equivalent, or average daily production of 635 to 645 thousand barrels of oil equivalent.

The company’s new production target represents a 1 to 3 percent production growth over last year after adjusting for 2014 asset sales.

“We entered 2015 with a strong liquidity position and we intend to manage it prudently. In response to continued weak commodity prices, we are further reducing capital expenditures and associated drilling activity,” CEO Doug Lawler said.

The company now forecast ending 2015 with $6 billion in combined cash and borrowing capacity under our credit facility.

“With this budget revision we anticipate being free cash flow neutral by the end of 2015,” Lawler added.