HOUSTON (Bloomberg) -- ConocoPhillips, the third-largest U.S. oil company, said it will write down an estimated $34 billion of previous acquisitions including a stake in OAO Lukoil, and cut 4 percent of its workforce, after energy prices plunged.

The company plans to reduce the value of its equity investment in Russia’s Lukoil by $7.3 billion, Houston-based ConocoPhillips said on Friday in a statement. Other asset writedowns totaling $1.3 billion will be recorded.
The biggest writedown, a $25.4 billion impairment charge in the oil and gas business, amounts to 87 percent of all the goodwill the company had on its balance sheet as of Sept. 30, according to Bloomberg data. The company plans to report its actual fourth-quarter results Jan. 28.
“It’s a pretty big number,” Jason Gammel, an analyst at Macquarie Securities USA Inc. in New York, said in a telephone interview. “It sounds like they’re writing almost the whole thing off.”
ConocoPhillips’s writedown exceeds the $30.2 billion in combined losses incurred by General Motors Corp. and Ford Motor Co. during the first three quarters of 2008, according to data compiled by Bloomberg.
In the third quarter of 2007, Detroit-based GM posted a record $39 billion loss after it wrote down the value of future tax benefits.
Oil futures in New York have fallen more than $110 since topping $147 a barrel in July, after recessions in some of the world’s largest economies crimped demand for diesel, gasoline, furnace fuel and chemicals.
-----------Living within means
“We are positioning ourselves in the current business environment to live within our means in order to maintain financial strength,” Chief Executive Officer Jim Mulva said in the statement.
ConocoPhillips had about 33,800 workers at the end of 2008, said Becky Johnson, a company spokeswoman. Four percent of the company’s workforce is 1,352 employees. The company also expects to reduce its contractor headcount, Mulva said in the statement.
The announcement was made after the close of regular trading on U.S. stock markets. ConocoPhillips fell 40 cents, or 0.8 percent, to $48.98 at 5:44 p.m. in after-hours trading.
ConocoPhillips said it will have a 2009 capital expenditure budget of $12.5 billion, 18 percent less than the $15.3 billion authorized for 2008.
The new budget includes loans to affiliates and contributions to a venture with Canada’s EnCana Corp. The budget includes about $10.3 billion for exploration and production and some $2 billion for refining and marketing. ConocoPhillips and EnCana are expanding an Illinois refinery to boost Canadian heavy-oil processing.
----------------------Exxon’s increased spending
Irving, Texas-based Exxon Mobil Corp., the world’s largest energy company, plans to increase capital spending by 20 percent this year to about $30 billion, Chief Executive Officer Rex Tillerson said in a Dec. 11 meeting with reporters in Chicago.
Chevron Corp., the second-largest U.S. oil company, probably will maintain spending on rigs and refineries at the same $22.9 billion level as 2008, Mickey Driver, a spokesman for the San Ramon, California-based company said on Dec. 1. Chevron plans to formally announce its 2009 budget later this month.
ConocoPhillips also said on Friday that the drop in commodity prices will affect its reporting of reserves. Some reserves, primarily in North America and Lukoil’s, will be removed from proved reserves based on prices at the end of the year.