Falling from a profit of $1.1 billion a year ago to a net loss of $2.2 billion, add Anadarko Petroleum Corp. (NYSE: APC) to the list of oil and gas companies being hit by brutal market conditions.

But the Houston-based E&P had some positives to share about its operations, both onshore and offshore, during its third-quarter 2015 conference call Oct. 28.

Cycle times in the Wattenberg Field, located in the Denver-Julesburg Basin in the United States, dropped by about 20% and costs per foot fell nearly 15%. An enhanced wellbore design lowered costs by nearly $1 million per well. In addition, drilling costs in the U.S. Wolfcamp Shale fell to about $7.5 million per well. Moving to field-wide pad drilling could lower costs an additional $1.5 million to $2 million per well, the company said.

Offshore megaprojects such as the $3 billion Heidelberg spar development, which could hold up to 400 million barrels of recoverable resources in the U.S. Gulf of Mexico (GoM), have cleared all major construction and installation hurdles with first oil on track for 2016. Plus, Anadarko’s third appraisal test of the GoM Shenandoah discovery encountered more than 620 net feet of oil pay—no water. The team is now getting a core to assess reservoir quality in the oil column.

But as the oil and gas industry moves deeper into a prolonged period of lower commodity prices, Anadarko executives said the company will focus on building and preserving value rather than growth.

“Our objective is to be a better company, not a bigger company,” Anadarko President and CEO Al Walker said on a conference call Oct. 28.

In all, Anadarko’s oil production has grown by more than 42,000 barrels per day YTD over 2014. But don’t expect any swift movement on drilled but uncompleted wells in the U.S.

“We’ve got a lot of flexibility around that,” said Darrell Holek, executive vice president, U.S. onshore exploration and production. “To date, we’ve got about 200 of these, largely in the Wattenberg … You can look at that as flexibility.”

Anadarko has the option to stand up completion crews in the fourth quarter, Holek said, but that might not be the best move for the company given commodity prices. He sees the uncompleted wells as opportunities to maintain production volumes while spending less money in 2016.

Given the challenging supply and demand fundamentals and continued commodity price uncertainty, Walker told investors to expect continued investment in higher-percentage, longer-cycle opportunities.

“Consistent with our 2015 approach to capital allocation, we’ll continue to invest fewer dollars in short-cycle U.S. onshore activities,” Walker said. “Growth will not be rewarded in this environment and focusing on preserving and building value is more appropriate at this time.”

In 2016, Anadarko’s capital spending will be similar to that of 2015. The company anticipates spending between $5.4 billion and $5.6 billion this year. The company’s two principal onshore assets in the DJ Basin and in the Delaware Basin are where the majority, if not all, of onshore capital will be spent, executives said.

Meanwhile efforts to lower costs continue, including offshore, where Anadarko has assets offshore Colombia, Côte d’Ivoire, Ghana, Mozambique and the GoM. Ultradeepwater drillship costs as well as support service costs—including wireline, pumping, mud and cementing operations and services—have fallen but not enough to offset lower commodity prices, said Robert Daniels, Anadarko’s executive vice president, international and deepwater exploration.

“What we’ll look at is higher flow rate completions and trying to work the cost structure down on the offshore marine development systems,” he said. “We’ve brought in new sixth-generation rigs and the initial results on those wells are very, very encouraging as far as reducing our cycle time to drill.”

For example, better drill times at some wells in the Heidelberg Field lowered drilling costs to less than $100 million, he said, noting the figure does not include the completion.

Further savings are needed to cope with lower commodity prices, and no one knows what the future holds. The price of West Texas Intermediate crude was about $45.50 a barrel at about 1:45 p.m. Oct. 28. It was $81.36 at this time last year.

“Our approach is plan for the worst and hope for the best,” Walker said.

Anadarko expects sales volumes—excluding those associated with EOR, Bossier and Powder River Basin CBM—to be between 290 MMboe to 292 MMboe this year. Maintenance capex will remain flat at about $2.7 billion. Commodity prices and service costs could impact the numbers.

Although Anadarko has opted not to chase growth on its 650,000 gross acres, Walker said the company’s current agenda is centered on laying the foundation for the future.

The company plans to continue its divestment plan in 2016 as it seeks cash neutrality with its capex, Walker said, noting Anadarko will look for opportunities to sell assets that are noncore and other assets deemed valuable by others. This year, Anadarko has sold about $2 billion in assets, including the Powder River Basin CBM divestiture.

“Looking ahead we will remain focused on creating value by enhancing our wellhead margins and moderating our base decline, improving cost efficiencies, maintaining an active exploration program and pursuing ongoing monetizations like we have done in prior years,” Walker said. “The value we are creating today will give us the foundation for future success. When we see value [in] pursuing growth we’ll be prepared to accelerate activity.”

Velda Addison can be reached at vaddison@hartenergy.com.

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