- As investors come to terms with the ~20% drop in shares of European oil company shares since last June, their focus will now turn to how the companies will maintain cherished dividends while coping with the collapse in oil prices.
- So far there is no hint of any major oil companies scaling back their dividend payouts, which long have been the key attraction for investors; BP's Bob Dudley says the dividend is "rock solid," and CEOs at Total (NYSE:TOT) and Eni (NYSE:E) also recently said they would maintain dividends.
- Analysts at Nomura and Barclays foresee an average 7% Y/Y decline in 2015 spending for the European oil majors, but with a large part of this year's project spending already committed, borrowing is inevitable to keep up dividend payouts.
- Shell (RDS.A, RDS.B) is seen by several analysts as best able to cope in the current environment, as its refining segment benefits the most from lower crude prices; Barclays expects Shell's Q4 EPS to rise by 29% Y/Y.