Source: ConocoPhillips.

Weak oil prices continue to wreak havoc on oil companies, with ConocoPhillips (NYSE:COP) being the latest example. The U.S. oil giant reported a loss on Thursday morning, even when adjusted for special items, after oil prices weakened during the quarter. Because of this the company is taking steps to lower its costs even further, including reducing its capital expenditure spending plan for the balance of the year.

Drilling down into the numbers
ConocoPhillips reported a loss of $1.1 billion, or $0.87 per share, which was a huge reversal from the $2.7 billion, or $2.17 per share, it earned in the third quarter of last year. However, embedded in that loss were a number of special items including a termination of a rig contract for a deepwater Gulf of Mexico drill ship, and other restructuring and impairment charges. After adjusting for those one-time items, the company still lost $446 million, or $0.38 per share.

Weak oil prices were the main culprit driving that loss. The company only realized $32.91 per barrel of oil equivalent, or BOE, in the quarter, after realizing $64.78 per BOE in the third quarter of last year. To help mitigate some of this price weakness, the company cut deeply into its cost structure, reducing operating costs 18% year over year.

On an even more positive note, production for the quarter was strong at 1.554 million BOE/d, which was above the high end of the company's guidance range of 1.51 million to 1.55 million BOE/d. Driving this strong result was the achievement of first oil at the Surmont oil sands project in Canada, which it co-owns with Total (NYSE:TOT), the successful completion of all of its major turnaround projects, and 10% year-over-year production growth in its Bakken and Eagle Ford Shale plays.

Surmont. Source: ConocoPhillips. 

A look ahead
Thanks to its strong third-quarter production, as well as the fact the company expects to complete all of its other major projects on time, ConocoPhillips is on pace to exceed its full-year 2015 production guidance. It now sees full-year production growth of 3% to 4%, which is higher than the 2% to 3% growth it guided to last quarter. Further, it sees fourth-quarter production in a range of 1.585 million to 1.625 million BOE/d.

Even with that higher growth, the company is reducing its capex guidance once again this year, this time all the way down to $10.2 billion, which is well below its initial guidance of $11.5 billion. Further, the company expects its operating costs to be $8.2 billion, or a billion dollars less than its initial guidance. ConocoPhillips even seemed to hint that its costs would be heading lower next year, with CEO Ryan Lance noting in the release:

We are accelerating actions to position our company for low and volatile prices, while improving the underlying performance of the business. ... We are exercising flexibility in our capital program, dramatically lowering our cost structure and divesting assets that do not compete for funding in our portfolio. These steps will make us more flexible and resilient for the future.

We'll know more about the company's 2016 capex plans on Dec. 10, which is when the company plans to release its budget.

However, given what its peers have announced, spending will likely be lower next year. French oil giant Total, for example, recently announced that it would be taking down its spending to between $20 billion and $21 billion next year and $17 billion to $19 billion in 2017 and beyond. That is well off of the peak of $28 billion Total spent in 2013 and much lower than the $23 billion to $24 billion Total is expected to spend this year. It's a real clear sign that oil giants don't see meaningfully higher oil prices on the horizon.

Investor takeaway
Times are tough in the oil patch, which was clear from ConocoPhillips' third-quarter financial results. This weakness is forcing the company to continue to cut costs, with more cuts likely on the way because the company has quite a gap between cash flow and spending right now, especially to maintain its generous dividend, which it still intends to do.

Matt DiLallo owns shares of ConocoPhillips. The Motley Fool recommends Total (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.