(Adds details and quotes on 2015 plans)
By Ernest Scheyder
WILLISTON, N.D., Jan 23 (Reuters) - Oil and natural gas producer Magnum Hunter Resources Corp said on a conference call on Friday it has cut all capital spending amidst plunging commodity prices, expecting prices to remain low for at least the next year.
The small exploration company focused on natural gas production in the Marcellus and Utica Shales, had scheduled the call with investors with one day’s notice to assuage concerns about its future as its shares have plunged 81 percent in the past year amid sinking natural gas prices.
“Rumors of our death have been greatly exaggerated,” Chief Executive Gary Evans told investors.
Magnum’s board plans to meet on Monday to discuss 2015 budget plans. At most, the company will spend $100 million this year, Evans said.
“When you’re in a death spiral of prices in this business, you’re crazy to be spending money,” Evans said. “We’re not spending any money right now.”
Oil prices have more than halved since last June to below $50 a barrel, forcing energy companies to slash budgets and spending programs for 2015.
Evans said the company, with roughly 90 percent of its production focused on natural gas and natural gas liquids, expects production of 30,000 to 35,000 barrels of oil equivalent per day this year.
Evans said he expects “an extended period of time” for low crude oil prices and is frustrated Wall Street does not appreciate rising industrial demand for natural gas.
Still, he said Magnum Hunter can continue to make money even with natural gas prices at $2 per million British thermal units. Natural gas futures are trading around roughly $2.96 per million British thermal units. Natural gas prices are down more than 30 percent in the past year.
The company believes the costs oilfield service providers charge will drop 40 percent in the next year as the market adjusts to low commodity prices, Evans said.
“The oilfield service sector has got to feel the pain,” he said.
The company has no contracts locking it into using drilling rig or hydraulic fracturing crews, which will save money, Evans said.
“That’s not our problem,” he said. “It’s the (oilfield) service guys’ problem.”
Magnum Hunter is seeking partners for a joint venture on its Utica shale holdings in Ohio, with a rough value of about $350 million, Evans said.
Only 30 percent of the company’s 2015 natural gas production is hedged, with banks restricting more hedges, Evans said.
In North Dakota’s Bakken shale, Magnum Hunter has no plans to sell its holdings at a loss, but no plans to spend capital there either on anything but well maintenance, Evans said.
Most of the company’s North Dakota acreage is in Divide County, a fringe part of the Bakken with limited oil reserves.
Reporting by Ernest Scheyder; Editing by Chizu Nomiyama and Marguerita Choy