CALGARY - There were more signs of belt-tightening in the oilpatch Monday, as oil prices continued their downward slide and energy stocks were pummelled.

Precision Drilling Corp. (TSX:PD) and Vermilion Energy Inc. (TSX:VET) were among the Canadian energy firms to cut capital budgets for next year, in addition to Trilogy Energy Corp. (TSX:TET), which is also halting its dividend "given the current market environment."

U.S. benchmark crude for January delivery was down more than four per cent from Friday's settlement, at US$63.05 a barrel on the New York Mercantile Exchange.

Crude is off nearly 40 per cent since mid-summer and the lowest it's been in five years. The drop has intensified since late last month when the Organization of Petroleum Exporting Countries decided to maintain its production rather than cut it in order to support prices.

The energy sector was down about 6.5 per cent on the Toronto Stock Exchange on Monday, following last week's five per cent slide.

Looking ahead to 2015, oilpatch firms are taking a conservative approach.

Precision Drilling said Monday it plans to spend $493 million in 2015. This year's spending is expected to ring in at $885 million, with $350 million being carried over into 2015's budget.

The company has one of North America's biggest fleets of rigs and other equipment used by oil and gas producers as well as significant operations in other parts of the world, such as the Middle East.

Precision will deliver 16 drilling rigs it has already announced, but it's not expecting to build any more until conditions improve, said CEO Kevin Neveu.

"Following the delivery of the 16 rigs, I expect our rig building activity will be idled until we see an improved commodity price environment and rising customer new build demand," he said.

"We remain focused on generating strong cash flow from our existing asset base, prudently selecting the most attractive capital projects and returning value to shareholders in the form of share price appreciation and dividends."

Meanwhile, Vermilion Energy, which has oil and gas operations in Europe, Western Canada and other international locales, said its capital budget will be $525 million, down 22 per cent from this year's projected spending.

"Our top two priorities are really to keep our balance sheet strong and, secondly, to maintain our dividend, so in a lower price commodity cycle we had to cut back our capital spending to achieve those two objectives," CEO Lorenzo Donadeo said in an interview.

Despite the lower spending, Vermilion is still expected to produce between 55,000 and 57,000 barrels of oil equivalent per day next year, 15 more cent higher than 2014.

The company will be shifting more of its spending to more lucrative European projects, where natural gas can fetch a prices 2.5 times higher than it would in North America, said Donadeo.

Oil and gas producer Trilogy, a producer focused on Western Canada, said it plans to spend $250 million next year, down from the $430 million 2014 estimate it provided in November. Its 3.5 cent monthly dividend will be stopped after the Dec. 15 payment

"Management recommended the discontinuance to preserve cash flow for ongoing operations given the current market environment," Trilogy said in a release.

Dundee Capital Markets analyst Geoff Ready said the move will save Trilogy about $53 million a year "and is the likely the right move given current commodity prices and the need to preserve balance sheet strength over the longer term."

Trilogy also announced its intention to buy back as many as 6.5 million of its 105 million outstanding common shares.

A report by major U.S. bank Morgan Stanley on Friday predicted it will likely get a lot worse before it gets better for oil markets.

Under a "bear" scenario, analyst Adam Longson said Brent crude, a key global oil benchmark, could drop as low as US$43 a barrel during the second quarter of next year before prices start to recover.

For all of next year, Longson predicts oil prices will be around US$70, down nearly 29 per cent from previous estimates.

"With OPEC on the sidelines, oil prices face their greatest threat since 2009, but we expect a volatile 2015 rather than a one-way trade," he wrote.

"Without intervention, physical markets and prices will face serious pressure, with 2Q15 likely marking the peak period of dislocation. But unlike 2009, this is a self-inflicted 'crisis,' and the coming oversupply is grossly exaggerated."

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News from © The Canadian Press, 2014