The biggest, fastest-growing oil producer in the U.S. said it plans to halt output growth this year, delivering a signal that shale companies are beginning to do what it takes to reduce oversupplies, Bloomberg reported Feb. 19.

EOG Resources Inc. (NYSE: EOG), which has boosted its oil production by almost 50% annually for the past five years, is slashing spending 40% and will drill half the wells it did in 2014. The Houston-based company fell more than 7% before the start of regular trading Thursday in New York after reporting fourth-quarter profit on Feb. 18 that missed expectations.

The company joins Apache Corp. (NYSE: APA) in its plan to pump about the same volume of oil as last year. The cutbacks are a sign that shale producers can slow down a lot more quickly than forecasters are expecting, said Michael Scialla, a Denver-based analyst at Stifel Nicolaus & Co.

“EOG is viewed as the premier company in shale development, and if they’re not going to grow, it is a very important signal to the market,” Scialla said in a telephone interview. “The argument that this slowdown is going to take a while to have an impact on supply is completely wrong.”

The reductions come as agencies such as the U.S. Energy Information Administration forecast that overall domestic production will grow 7.8% to 9.3 million barrels of crude a day (MMbbl/d) this year, adding to the glut that’s pushed down prices.

Saudi Output

“The company is not interested in accelerating crude oil production in a low-price environment,” EOG said in a statement.

The collapse of oil prices by more than half since June has forced major producers and drillers to cut more than $40 billion in spending and fire 50,000 workers. The number of oil-drilling rigs working onshore has declined by a third since October.

At the same time, Saudi Arabia is boosting production in a bid to maintain market share. Crude oil output is about 10 MMbbl/d, New York-based Pira Energy Group said in a weekly report, citing discussions with Saudi customers. That would be the highest since July and up from an average of 9.7 MMbbl/d in the second half of 2014, according to data from the Joint Organisations Data Initiative, an industry group supervised by the Riyadh-based International Energy Forum.

Crude prices have rallied in recent weeks to more than $50/bbl as the pace of cuts has surprised market analysts. U.S. oil prices fell 3.7% to $50.19/bbl at 7:13 a.m. in New York on Saudi Arabia’s output and estimates that U.S. inventories this month continue to rise. The average price for Brent crude, the benchmark used by most of the world, dropped 30% from a year earlier in the quarter, to $77.07/bbl.

Marginal Operators

The ability of shale producers to halt production should “help the market regain equilibrium,” Bob Brackett, an analyst at Sanford C. Bernstein & Co., said in a Wednesday note to investors. “If the most successful player doesn’t grow in 2015, what does that imply about marginal operators?”

EOG’s net income fell to $444.6 million, or 81 cents a share, from $580 million, or $1.06, a year earlier. Profit excluding one-time items was 79 cents a share, less than the $1 average of 36 analysts’ estimates compiled by Bloomberg.

Shares fell 7.7% to $88 at 7:44 a.m. on Feb. 19. EOG is up 6.6% over the past year.

The earnings report was posted on Feb. 18 after the close of regular trading on U.S. markets.