With no relief expected from oil or natural gas prices through this year, Anadarko Petroleum Corp. plans to direct its onshore might to only two basins, the Denver-Julesburg and the Permian, management said Tuesday. No rigs are planned in any other onshore play.

Preserving flexibility is paramount, CEO Al Walker said during an investor conference call. Investors demand no less in this environment, he added. To that end, cash flow has to match cash outlay.

"Our idea for 2016 is to do as much preservation as we can as well as we can," and prepare to be "spring-loaded for the day when we can go into growth mode," Walker said. As in 2015, "we are committed to again investing well within cash inflows...It almost goes without saying that we are in a very tough market, which creates a lot of challenges. Our objective this year is to manage through all of the challenges as we can and to get through this year with the fewest bumps, bruises and scratches as possible..."

Overall capital spending this year is set at $2.6-2.8 billion, about half what was spent in 2015 (see Shale DailyFeb. 2). Specifically in the U.S. onshore, $1.1 billion is budgeted, about 70% lower year/year. Around $700 million also is destined for the Gulf of Mexico (GOM) deepwater, with the same amount set aside for international projects.

"Anadarko's U.S. onshore activities will be reduced the most, by almost $2.5 billion in capital investments year/year, as the company preserves its opportunities, including in two of the highest-returning onshore assets in North America -- the Delaware and DJ basins -- for a more compelling price environment," Walker said. The onshore rig count has been cut to five from 25.

The plan is to focus on the onshore base production and retain flexibility to leverage an inventory of  230 intentionally drilled but uncompleted (IDUC) wells. In the Delaware subbasin, four operated rigs are scheduled to delineate and hold acreage with one fracture crew. Production is expected to increase to 40,000-42,000 boe/d from 32,000 boe/d. Sixty IDUCs are expected at year's end.

Multi-pad drilling is the ultimate goal in the Delaware, which would bring the cost of a well to $5.2 million from $6.6 million in 2015. Newly drilled wells in the Delaware now breakeven at $35/bbl West Texas Intermediate (WTI) and $2.50/Mcf Henry Hub, with IDUCs breaking even at around $30.

In the DJ, two fracture crews are planned with only one operated rig, versus seven in 2015. Anadarko, which holds an estimated 350,000 net acres, expects output to edge up to 225,000-228,000 boe/d from 224,000 boe/d. By year's end, 45 wells are expected to be drilled, with 60 IDUCs. Newly drilled wells in the DJ are breakeven at $30/bbl WTI, $2.50/Mcf Henry Hub, and IDUCs breakeven at about $25/bbl.

Adjusted for divestitures, onshore volumes by the end of the year should decline by about 3% from 2015, with oil production remaining flat and gas volumes dropping by an estimated 6%.

Total onshore production should average 596,000-601,000 boe/d versus 2015's 616,000 boe/d. Liquids volumes are forecast to decline to 266,000-270,000 boe/d from 283,000 boe/d.

In the Greater Natural Buttes formation, production is seen declining year/year to 62,000-65,000 boe/d from 69,000 boe/d, while in the Haynesville Shale, output should decline to 48,000-50,000 boe/d from 57,000 boe/d. Eagle Ford Shale volumes are forecast to fall sharply to 71,000-73,000 from 85,000 boe/d, while Marcellus Shale volumes should decline to 68,000-70,000 boe/d from 75,000 boe/d.

GOM volumes, which hit 85,000 boe/d in 2015, are expected to decline to 73,000-76,000 boe/d by the end of 2016. This year the plan is to focus on subsea tiebacks, which "offer returns of more than 30% at today's strip prices," Walker said. Tiebacks are planned at Lucius, Caesar/Tonga and K2. In addition, appraisal activity would be ongoing at Shenandoah and Phobos. One exploration well is planned at the Warrior prospect, which if successful, could be a tieback to K2.

About $3 billion in monetizations are planned for 2016, a goal nearly halfway completed last month after Anadarko sold $1.3 billion of assets (see Shale Daily,Feb. 25).