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Making money investing in oil stocks should be a breeze these days.

All you have to do is look for the companies that are ready to announce that they will spend a whole lot less next year on things such as drilling for oil. The deeper they cut, the higher their stocks leap. If they slash 2015 budgets for a second time, it's another windfall. Dividend cut? Hallelujah.

That's been the story of December in the oil patch as crude markets have failed to find a floor, and executives have had to keep ratcheting down expectations for cash flow and, hence, spending.

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In the old days, such as around last June, production growth was the holy grail and companies had no problems spending all they could on operations, acquisitions and dividends. If they had more opportunities than money, capital markets were only too happy to make up the difference. But the boom of 2014 turned out to be one of the shortest.

Now, with West Texas Intermediate crude worth just over half of what it was six months ago, investors want capital to be preserved and relative debt levels to stay within reason – basically a shift to survival mode. If a producer can still achieve numbers that are close to short-term output forecasts, all the better.

Last week, Bonavista Energy Corp. jumped 9 per cent after it cut about $150-million from its not-all-that-old 2015 budget, pegging a new range at $375-million to $425-million. Like its peers, it blamed the collapse in crude prices. It now sees an annual production gain of 7 per cent.

The same day, Whitecap Resources Inc., which had been an active acquirer of assets and frequent tapper of equity markets, revised its budget down by a third to $245-million and served notice it would not increase its dividend. That triggered a nearly 10-per-cent leap in the stock.

Bellatrix Exploration Ltd. took the blade to its budget twice, cutting $50-million at the start of this month and another $100-million on Monday, leaving the expected outlay at $300-million, The shares are up a fifth since the middle of the month.

Journey Energy Inc., which went public in June, reduced its budget to $70-million from $90-million and cut its payout to shareholders. The shares are up 38 per cent since last week.

One of the biggest percentage budget cuts so far was that of MEG Energy Corp., the oil sands producer. MEG chopped its two-week-old capital spending plan to $305-million from $1.2-billion, but held on to its target for a 19-per-cent production increase. The stock rose 11 per cent in the session and is up nearly a third in the past week.

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Of course, all the stocks have tumbled from their June highs against the backdrop of a worsening oil market. Still, the recent budget slashing shows some can be flexible with their plans when they have to be.

Some of the first to pull money off the table were the smaller dividend-paying producers, the so-called divcos, that found their yields surging to unsustainable levels beyond 20 per cent as share prices sank.

The biggest unknown is how long the trough will last. Saudi Arabia's Oil Minister, Ali al-Naimi, has been playing the role of the Cheshire Cat when asked how low OPEC will allow crude to fall before the cartel makes any moves to rein in production. Some OPEC officials, apparently taking sharp aim at the higher-cost U.S. shale producers, have mused that it could be a very long time before crude returns to $100 (U.S.) a barrel.

Meanwhile, Canadian natural gas is offering little help on the corporate cash flow front, selling lately for under $3 (Canadian) per thousand cubic feet on the Alberta spot market in what is normally the height of the heating season. It fetched $1 more than that one year ago.

Another mystery is how many times energy producers can keep the market interested with budget cuts as a weak market persists. At some point, investors may tire of growth projections being clawed back to protect balance sheets.

But what if they just can't get enough and this becomes a long-term trend? One logical conclusion could be an oil producer's shares skyrocketing to new heights when it announces it's getting out of the oil business altogether.

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