The oil price collapse will cut BHP Billiton's earnings by up to 14 per cent over the next three years, according to UBS.
Last week, BHP chief executive Andrew Mackenzie said the company would slash the number of oil rigs drilling onshore in the US by 40 per cent by June.
At current oil prices, parts of its onshore US business are unprofitable.
The miner has moved quickly to offset the oil price crash through capital expenditure cuts.
But the price falls will cut 8 to 14 per cent from BHP's earnings over the next three years, UBS analyst Glyn Lawcock wrote in a note to clients on Wednesday. "We see a lower, more painful path to (price) recovery than prior cycles," he wrote.
BHP is tipped to record EBIT of $US16.1 billion this financial year, and $US15.1 billion in 2016. Last year, EBIT was $US22.8 billion.
BHP investors will be focused on three main areas, according to Mr Lawcock - the miner's balance sheet strength, its ability to weather a sustained period of lower oil prices and maintain its dividend, and thirdly, whether any growth can occur if oil prices stay low.
BHP's sensitivity is a $US50 million hit on net profit in the current year for every $US1 a barrel move in the oil price.
Oil prices have crashed almost 50 per cent in the past six months, and UBS has taken the knife to its near term oil forecasts.
But oil prices were not expected to fall below $US40 a barrel for any sustained period of time, Mr Lawcock said.
UBS has revised Brent oil forecasts to $US52.50 a barrel for the current year from $US69.75 and to $US67.50 for 2016, from $US80.
But UBS said the process of self-correction was starting in the industry, with oil and gas players announcing sharp cuts to capex.
"These low oil prices in 2015-16 should lead to a steeper than previously expected capex cuts, underscoring our confidence in a longer term recovery in oil prices and are maintaining our long term oil price at $US90 a barrel," he said.
UBS' price estimates for the US benchmark, West Texas Intermediate, are $US49 for the current year and $US62.50 for 2016.
The price predictions are a far cry from last year's prices, when Brent averaged $US92.89, and WTI $US99.38.
Investors and analysts were preparing to quiz BHP when it reports its half-year results in February on the production dent for next financial year made by the oil rig cuts.
UBS says the cut in oil rig count – from 26 rigs in operation across its onshore US acreage to 16 rigs – will reduce previous volume forecasts by 15 per cent over the next three years.
But the decision will save the company $US1.5 billion to $US2 billion next financial year.
"After capex the next focus will likely be on reducing operating costs (contractors and staff) further from prior guidance of at least another US$3.5bn of productivity related gains by end of financial 2017," Mr Lawcock said.
Mr Mackenzie said last week that the company was "alert to opportunities to further increase cash flow".
BHP has said it will spend $US14.2 billion on capital investment this financial year and $US13 billion next financial year. But the forecast was made before oil prices took a bath.
Deutsche Bank analyst Paul Young says BHP will likely pare the $US4 billion in capital earmarked for its US onshore oil business this year to about $US3 billion.
