Husky Energy Dividends Get Cut - More Companies to Follow?

On December 17, 2008 I titled my DIV-Net post "Energy Dividends On The Chopping Block", as I made the case that the extreme drop on in oil prices could cause dividend paying energy stocks to cut their dividends.

Husky Energy (HUSKF.PK) announced they will cut their dividend from C$0.50/share to C$0.30/share. The company actually put it a different way, they have 'set' their dividend to C$0.30/share. That is a 40% cut. Husky is adapting to a much lower energy price environment. The stock now yields about 4% on Wednesday's closing price.

The other stock I mentioned in the post, BP, just announced earnings and left their dividend unchanged. The company announced their first quarterly loss in seven years, but stated that they can have a break-even 2009 with oil prices between $50-$60 per barrel. The stock yields 7.8%.

Several other Canadian oil and gas trusts have slashed their distributions including widely held, Canadian Oil Sands Trust (COSWF.PK).

Comments

[GD:]

Was The BP loss a write down [non cash] of inventory, vs a solid but lower profit?

Feb 05 08:27 AM

[redbaron:]

The BP loss was on a write-down of inventory.

Feb 05 10:29 AM

[Midas1:]

BP is one of the better energy stocks.

Feb 05 11:59 AM

[k45:]

I doubt there is much correlation between the pink sheet companies and the oil majors. What's the long term dividend history of the pink sheet companies? I'd bet they are not "Dividend Aristocrats" and don't have a long term history to defend.

Feb 06 08:42 AM

[long_on_oil:]

The anticipation of a dividend cut may be the reason BPs yield is so high but after the CEO stated that it is his mission to increase share holder value, I would be surprised to see a cut anytime in 2009. When oil was $140 BP based their budgets on $75 oil and the management said that $75 was a more realistic price. At the time most analyst laughed at BP. That was a bold move to make that statement and I like this management.
Of all the oil companies BP is clearly the leader in alternate sources of energy and therefore the best of the oil companies to invest in for the future.

Feb 06 08:44 AM

[PeteK:]

So the break-even point is oil at $50 - $60 price range.
That means if oil remain below that range, most oil companies
will lose money. Is that what it means ?
Right now oil is around $40, what can they do about it ?
OPEC said they will cut production until oil go back up to $70
or more. You think they mean it ?

Feb 07 04:28 AM