Energy companies cutting investments

Fuel Fix:

Oklahoma City-based Continental Resources continues to cut its 2015 budget in response to falling oil prices.

The exploration and production company said Monday that it plans to spend $2.7 billion on capital expenditures next year.

That’s down from the $4.6 billion budget it announced last month, which itself was a cut from a from its original $5.2 billion target.

The company also dramatically reduced its planned production growth. Last month, it told investors to expect 23 percent to 29 percent production growth in 2015. It’s pared that expectation back to projected growth of 16 percent to 20 percent.
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This is a good example of the difference between investor own companies and state energy operations.  Rather than wasting resources on social programs to buy votes energy companies pump profits back into the economy to expand production.  When price pressure cuts profits they reduce investments to get them in line with the cash flow of the business.