Oil Companies Slash Dividends Amid Cash Crunch
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While energy stocks managed to close flat Monday despite the continued bloodletting in the commodity price, the carnage of $30/barrel oil is nonetheless reverberating across Wall Street. One telling sign is the number of top-tier oil & gas companies that have been forced to cut their dividends in order to conserve cash.
Today, Diamond Offshore Drilling, Inc. (NYSE: DO) said it would discontinue its quarterly cash dividend of $0.125 per share, which will preserve an additional $69 million on an annual basis.
Last week, powerhouse ConocoPhillips (NYSE: COP) said it would cut its dividend 66% to 0.25/share per quarter, or $1 annualized.
In January, Noble Energy (NYSE: NBL) cut its dividend 44% to $0.10/share per share, or $0.40 annualized. In addition, Rowan Companies plc (NYSE: RDC) and Tidewater Inc. (NYSE: TDW) both eliminated their dividend during the month.
It's not just common stock dividends that are at risk. Also in January, Chesapeake Energy (NYSE: CHK) announced that it has suspended payment of dividends on each series of its outstanding convertible preferred stock.
Unfortunately for investors, and those working or doing business in the sector, the cuts to dividends, capex budgets and workforces are likely still in the early innings.
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