Anadarko will reduce 2016 budget by 50% and have layoffs

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Anadarko recently revealed that it plans to run in a sort of efficiency-mode through 2016 in order to survive these rough times in the oil and gas industry. The company plans on laying low for the rest of 2016 to keep overall costs down.

The firm plans on reducing its budget to $2.8 billion, which is a 50% reduction from 2015. This year will undoubtedly be challenging for all O&G producers, and Anadarko considers its move to be wise in such times of turmoil. Only the most promising and profitable projects will be pursued at this point. To put it simply, “We don’t find the returns in this environment compelling,” spoke CEO of Anadarko, Al Walker. It seems like Anadarko’s future plans will be to sideline any huge growth projects and play it safe for the rest of 2016.

This decision came about partly because of a $1.25 billion loss in the fourth quarter of 2015. It became clear that there was no other option but to implement a new program that would dramatically reduce overall costs in 2016. Part of the cost-reduction portion of this plan is going to be including layoffs throughout 2016. However, the company does not think these measures should be considered that unusual, as 2016 will most likely prove to be a challenge to all the major players in O&G.

Executives plan to release more details of the plan at a March 1 presentation to analysts.

Article written by HEI contributor Timothy McNally.

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