With the smallest annual profits in 13 years, ExxonMobil Corp. is reducing its capital spending by 25% to a 10-year low and suspending its share buybacks as a shield in the declining oil and natural gas trade, the largest U.S. operator said Tuesday.

The Irving, TX-based supermajor has set capital expenditures in 2016 at $23.2 billion, the leanest spending plan in nine years. In 2013, capex had peaked at $42.5 billion, but in 2015 spending fell to $31 billion.

The producer outperformed Wall Street forecasts in 4Q2015, but profits still were 58% lower year/year at $2.78 billion (67 cents/share) versus $6.57 billion ($1.56). The Street’s average forecast was 63 cents/share. Revenue slumped 31% to $59.81 billion, better than an average forecast of $51.36 billion.

For 2015, net profits fell by more than half to $16.2 billion, the lowest earnings results since 2002. Upstream earnings crashed to $7.1 billion, down $20.4 billion from 2014. Lower realizations decreased profits from 2014 by $18.8 billion.

The last time ExxonMobil’s quarterly profits were below $3 billion was in 2002, reflecting “the challenging environment,” CEO Rex W. Tillerson said.

The U.S. upstream business lost $538 million from writing down the value of the oil and gas reserves, compared with year-ago profits of $1.5 billion. Integrated operations provided a lift, with downstream profits more than doubling to $1.35 billion.

Production year/year rose 4.8% worldwide, even as natural gas volumes were reduced throughout the Americas and in Europe. Six major upstream projects, including in Canada and the United States, were completed in 2015, helping ExxonMobil achieve a full-year plan to produce 4.1 million boe/d.

Liquids production totaled 2.5 million b/d, up 299,000 b/d. Natural gas production was 10.6 Bcf/d, down 631 MMcf/d from 2014 because of regulatory restrictions in the Netherlands and field decline, partly offset by entitlement effects.

While capex is coming down, the long-term plan to invest through the cycle is to continue. “The scale and diversity of our cash flows, along with our financial strength, provide us with the confidence to invest through the cycle to create long-term shareholder value,” Tillerson said.

Investor chief Jeff Woodbury, who helmed the conference call with analysts, said ExxonMobil was managing the business “to create margin through self-help. We have built this business to ensure that it’s durable in a low-price environment, and then any upstart from that is additional return on investment…The organization is very focused on managing the fundamentals.

“For both gas and oil, we’re constructive on long-term demand growth,” highlighted by the company’s annual outlook for energy demand, which was released last month (see Daily GPI,Jan. 25). The largest gas producer in the United States expects gas to overtake coal within a few years and continue to gain market share through 2040. Oil supply has been growing at a higher rate than demand, but “we expect that to converge in the second half as seasonal demand increases. We’ve got to come in balance like we have seen historically. We do have a bit of a buildup in crude storage that will have to be worked off before you see real growth in prices.

“But ultimately we’re going to manage wherever we are in the price cycle to create margin by focusing on the fundamentals.”

It’s the same story for liquefied natural gas (LNG) demand, Woodbury said. “We’re very constructive on where LNG demand is going to go from now to 2040.”

Until there’s a recovery, however, “we’ll continue to live within our means…And if need be, we’ll have to tighten up if we have to…”

ExxonMobil currently is running seven rigs in the Bakken Shale and eight in the Permian Basin. A slowdown is inevitable in this price environment, but investing through the cycle remains key, Woodbury said.

“We have a very extensive well inventory in the unconventional business, particularly the liquids plays,” which include the Ardmore Basin’s Woodford Shale. “When we saw the big ramp up in rigs back in 2014 and 2015 we were very measured in how we ramped up because we wanted to ensure that we fully developed the learning curve and captured those real cost benefits that translated to higher value as we fully developed these fields. So the investments that we’re making right now are economic. They are attractive in this business climate.”

ExxonMobil has to maintain “a certain baseload of activity where we can continue to leverage some of the best service providers that we’ve got; we’re one of the few that can continue to invest in the downcycle.” All of the oilfield services for the unconventional business have been high-graded globally during the downturn, not only in North America, which should pay off down the road, he said.

ExxonMobil plans to buy back shares through March to offset dilution, but there are no plans to make repurchases to reduce outstanding shares. During 4Q2015, the producer bought back about $500 million in shares outstanding; it used to average about $3 billion per quarter.