US-based ConocoPhillips has announced plans to cut capital expenditures in deepwater exploration.
Significant reductions are expected to come from the operated Gulf of Mexico programme.
ConocoPhillips chairman and CEO Ryan Lance said: "Since the start of the oil and gas price downturn last year, we have moved decisively to position ConocoPhillips for lower, more volatile prices by exercising capital flexibility and reducing operating costs across our business.
"Our decision to reduce spending in deepwater will further increase our capital flexibility and reduce expenses without impacting our growth targets."
ConocoPhillips also announced its proposal to terminate its contract for the Ensco DS-9 deepwater drill ship, which was scheduled for delivery to the Gulf of Mexico in late 2015.
Ensco DS-9 was scheduled to begin drilling the company’s operated deepwater inventory on a three-year contract.
According to ConocoPhillips, as per the contract, it is subject to a termination fee that represents contract day rates for up to two years.
With increased capital flexibility, the company aims to direct more investment to its captured resource base of 44 billion barrels of oil equivalent.
This includes identified inventory in Eagle Ford, Bakken, Permian and Western Canada unconventional plays.
Lance added: "We are committed to delivering the value we have created from these discoveries, while reducing the number of deepwater exploratory prospects we drill in the future."
Image: ConocoPhillips chairman and CEO Ryan Lance. Photo: courtesy of Business Wire.