"We are positioning ourselves in the current business environment to live within our means in order to maintain financial strength," said Jim Mulva, ConocoPhillips chairman and chief executive, in a statement.
Conoco also said it has approved a $12.5 billion capital spending program for 2009. That's down 18% from an estimated $15.3 billion in capital spending during 2008.
The company warned that it expects to take a $25 billion impairment charge when it releases fourth-quarter financial results on January 28. It is also taking a $7.3 billion non-cash charge related to its investment in Russian oil company Lukoil.
"With the recent substantial decline in commodity prices and worldwide equity markets, we expect to recognize several significant noncash impairments in the fourth quarter," Mulva said.
Analysts expect Conoco (COP, Fortune 500) to report earnings of $1.57 per share on revenue of $55.3 billion, according to consensus estimates. That's down from earnings of $2.48 per share and sales of $52.79 billion a year ago.
The cost-cutting moves come as the global economic recession has undermined the once robust demand for crude oil, which has put enormous pressure on the energy sector.
Crude lost more than half its value in 2008 and suffered a staggering decline of more than $100 a barrel from its peak last summer. So far this year, oil is down another 21%.
Phil Weiss, an analyst who follows Conoco for Argus Research Company, said the measures were "a bit draconian."
"They're probably battening down the hatches in the event that the environment remains this bad for a while," he added.
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