By  Ed Attwood  -  

Whiting said that it would spend 80 percent less this year, in what is the largest cutback to date by a major US shale company, Reuters reported. The firm will cease fracking and completing wells as of April 1, while most of its $500 million budget will be spent on mothballing its drilling and fracking operations, the newswire said.

The move is likely to hit production and hurt the economy of North Dakota, the second-largest oil-producing US state after Texas, which is home to the Bakken shale formation. "We believe this conservative strategy should help us to maintain our liquidity position and leave us well positioned to capitalize on a rebound in oil prices," Whiting CEO Jim Volker said in a statement. Saudi Arabia has been at the forefront to keep its production high, despite the slide in the oil price, in a bid to maintain market share.

However, that policy has come at a cost, with many major oil producers introducing economic reforms in a bid to balance their books. Speaking at a US industry conference this week, Saudi oil minister Ali Al Naimi denied that the kingdom was waging a war with high-cost shale producers in North America, but also warned them to either cut costs or face bankruptcy. “The producers of these high-cost barrels must find a way to lower their costs, borrow cash or liquidate,” Al Naimi said.

“It sounds harsh, and unfortunately it is, but it is a more efficient way to rebalance markets. Cutting low-cost production [such as Saudi Arabia’s] to subsidise higher-cost supplies only delays an inevitable reckoning,” he added. Last week, Saudi Arabia, Qatar, Russia and Venezuela proposed a freeze on production, if other large producers also took part. However, Iran’s oil minister called the plan “laughable”, according to an Iranian news agency report on Tuesday.