Chevron Corp., the second-largest U.S.-based producer, and ConocoPhillips, the largest independent, unveiled drastically lower capital spending plans for next year as they plan for a continuing slump in commodity prices.

San Ramon, CA-based Chevron late Wednesday announced it would budget $26.6 billion for total capital expenditures (capex), 24% less than this year’s spend, and direct most of the money for both the upstream and downstream arms to international projects.

The oil major plans to spend $5.4 billion for U.S. upstream development, while it has earmarked $18.6 billion for the international business. The integrated producer plans to set aside $2.2 billion for the downstream and $4.5 billion for affiliates, including the U.S. petrochemical business, Chevron Phillips Chemical Co. LLC.

“Our capital budget will enable us to complete and ramp-up projects under construction, fund high return, short-cycle investments, preserve options for viable long-cycle projects, and ensure safe, reliable operations,” Chevron CEO John Watson said. “We gain significant flexibility in our capital program as we complete projects under construction. Given the near-term price outlook, we are exercising discretion in pacing projects that have not reached final investment decision.”

In the upstream, $9 billion is budgeted for “existing base producing assets,” including shale and tight resources, which is 25% less than this year. Roughly $11 billion would be earmarked for ongoing capital projects, down 21% year/year. For projects scheduled to be sanctioned in 2016, $3 billion is planned, a 15% decline year/year.

Global exploration spending has been slashed to $1 billion from this year’s $3 billion budget.

ConocoPhillips, based in Houston, now plans to spend 25% less for capex than it did this year and 55% less than it spent in 2014. Capex for 2016 is set at $7.7 billion for the upstream-only business, with most of the budget trained on North American onshore projects in the Lower 48, Canada and Alaska.

Even with a lower capex plan, the producer still expects to see 1-3% production growth, adjusted for sales, CEO Ryan Lance said during a conference call Thursday. Operating costs in 2015 have fallen in part on drilling efficiencies, and next year operating expenditures are expected to match capex at $7.7 billion, which compares to a total of $10.5 billion in 2014.

“We’re setting an operating plan for 2016 that recognizes the current environment, which remains challenging,” Lance said. “We are significantly reducing capital and operating costs, while maintaining our commitment to safety and asset integrity. We also retain the flexibility to adjust capital spending in response to market factors.”

About $2.6 billion, or 34%, of 2016 capex is allocated to the Lower 48 states, a reduction of about 30% from 2015 expected spending. Exploration chief Matt Fox said during the conference call that the lower spending is possible because of improved efficiencies, a lower average rig count and lower infrastructure spending in the unconventionals, as well as deflation.

Lower 48 capex is to focus mostly on the unconventionals, and 13 rigs would continue to be maintained across the Permian Basin and Eagle Ford and Bakken shales. There is flexibility to “ramp up or down activity in these plays,” Fox said.

Other U.S. spending is to target exploration and appraisal activity in the Gulf of Mexico (GOM), base maintenance and conventional drilling programs. ConocoPhillips is exiting the GOM, but it still has to sell those assets and it has ongoing work with partners. About 17%, or $1.3 billion, is allocated to Alaska, a reduction of about 5% year/year. And 10% of the capex, or about $800 million, is to be spent in Canada, down 30% from 2015 levels.

The dividend remains a priority.

“Our plan highlights the actions we accelerated over the past year to position our company for low and volatile prices. As we enter 2016, ConocoPhillips has greater capital flexibility, a more competitive cost structure, a streamlined portfolio and the ability to deliver profitable growth from a high-quality resource base. These advantages, coupled with our strong balance sheet, give us the ability to maintain a compelling dividend and close the gap on cash flow neutrality across a range of prices.”

In line with its peers, ConocoPhillips has continued to trim its spending this year. It had set an $11.5 billion budget for 2015, which was 40% lower than the $17.1 billion it spent in 2014. However, capex was reduced to $10.2 billion in October, while lower operating costs allowed the producer to trim its forecast to $8.2 billion from $9.2 billion (see Daily GPI, Oct. 30).

At the end of August, ConocoPhillips had laid off about 10% of its global workforce (see Daily GPI, Sept. 2). However, ConocoPhillips now has about 15% fewer employees than it had at the end of 2014, Lance said.

The company continues to reduce its footprint through asset sales, with most of the divestments in the United States and 80% of the projects weighted to natural gas. By the end of this year about $2.3 billion in divestments should be completed. Through the first nine months, $600 million in divestments had been completed, with the remaining $1.7 billion representing transactions “with definitive agreements in place that are expected to close in the fourth quarter of 2015 or the first quarter of 2016.” Production from the assets being sold is estimated to account for more than 70,000 boe/d of 2015 output. More asset sales also are contemplated.

By category, ConocoPhillips total capex for 2015 includes $1.2 billion (16%) for base maintenance/corporate expenditures; $3.0 billion (39%) for development drilling programs; $2.1 billion (27%) for major projects; and $1.4 billion (18%) for exploration/appraisal.

Full-year 2015 production guidance is unchanged at 1.585-1.595 million boe/d, excluding sales. Full-year 2015 production associated with the divestitures is 70,000 boe/d. Adjusted for the volumes sold, 2015 production guidance would be 1.515-1.525 million boe/d, the new baseline from which the company expects to grow 1-3% in 2016.

Production growth in 2016 primarily is expected from the startup of a liquefied natural gas export project in Australia, continued ramp-up of oilsands production in Canada and recent project start-ups in Alaska. Growth would be offset in part by a decline in the Lower 48 and Europe.

“Our 2016 operating plan achieves a balance between exercising flexibility to manage through the current oil and gas price downturn, and retaining optionality for medium- and long-term growth,” Lance said. “We have a unique combination of a resilient portfolio and financial flexibility to manage through the current price cycle, while preserving value and continuing to deliver on our commitments to shareholders.”