Oil giant Occidental Petroleum (NYSE:OXY) today announced a further reduction in its 2020 capital spending program following the continued slide in crude oil prices. The company now expects to invest between $2.7 billion and $2.9 billion, which is about $600 million lower than its recently revised budget range. Meanwhile, it's 47% below its initial spending plan.  

Occidental's deeper budget cut will have a meaningful impact on its production this year. The company expects output to be between 1.275 million and 1.305 million barrels of oil equivalent per day (BOE/D), which is about 6% below its prior guidance range.

Drilling rigs lit up at dusk.

Image source: Getty Images.

In addition to further reducing its capital budget, Occidental also plans to cut at least $600 million in operating and corporate costs this year, which includes what it deemed "significant" salary decreases for its executive leadership team. This expense reduction is in addition to the $1.1 billion in operating and overhead cost synergies Occidental expected to capture this year following its acquisition of Anadarko Petroleum.

The dual reductions to its capital budget and operating expenses will further reduce Occidental's cash flow break-even level, better aligning spending to the price of oil, which has recently fallen into the low $20s. That will help protect the company's debt-laden balance sheet by lessening the likelihood that it will need to borrow money to fund its operations. These moves will buy it more time to complete additional asset sales so that it can shore up its balance sheet.