Conoco cut its 2020 budget by $700 million, or 10%, and said that would hit production by 20,000 barrels of oil equivalent per day (boepd) from 1.3 million boepd last year.

The company in November had set a target to raise oil production by 3% this year on a budget of nearly $7 billion.

Producers have been slashing spending and trimming output as a global oil surplus has been building. Demand has been falling as employees stay home, stores remain closed and governments limit travel to fight coronavirus.

U.S. crude futures were trading down at $23.96 a barrel on Wednesday, declining by more than half from December as OPEC and Russia threw off output curbs and launched a price war that has added to the price drop.

Conoco originally set its 2020 budget and production targets assuming oil at $50 a barrel.

The company’s shares were down 6.3% to $24.60 amid a broader drop in oil stocks and U.S. stocks, and opened at their lowest level in 16 years.

“Our industry is clearly experiencing an unprecedented event brought about by simultaneous supply and demand shocks,” Chief Executive Officer Ryan Lance said.

Conoco said it would slow development activity in the United States, lower it in 48 states and defer drilling in Alaska.

The company’s cuts will add to Alaska’s pain. The state faces a $1.5 billion budget deficit and froze hiring this month as revenue from oil and gas continues to fall.

Conoco had forecast spending about $3.4 billion in the state this year, more than half the industry’s total capital and operating expenditure in the state. It is developing new fields in the northern-most U.S. state and has said it would spend about $25 billion there to maintain and increase production through 2045.

The company also halved its $3 billion a year share buyback program, and said it would reduce its share repurchase to a quarterly run rate of $250 million beginning in the second quarter, from the previous run rate of $750 million.

Conoco has turned to distributing returns to shareholders primarily through stock buybacks after slashing its dividend during the last oil bust in 2016.

Other shale firms and oil majors have also sought to cut production and spending. Saudi Aramco last week outlined plans to cut its spending by $2.8 billion to $7.8 billion while Exxon Mobil, BP and Chevron also promised unspecified cuts.


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