Connocophillips Executive Summary
ConnocoPhillips Dividend Cut
ConnocoPhillips released its fourth quarter 2015 results on 4th February. The company announced that its board of directors have taken a decision to reduce the company’s quarterly dividend to 25 cents per share, compared with the previous quarterly dividend of 74 cents per share. The dividend is payable on March 1, 2016 to stockholders of record at the close of business on Feb. 16, 2016. This action frees up an incremental $ 2.4 billion in cash. The decision is just one of the actions being taken to maintain its strong balance sheet in response to both the weak outlook for commodity prices and expected credit tightening across the industry.
Under the same action plan the company has also revised its previously disclosed 2016 operating plan. The company has cut its full year guidance for capital expenditure from $ 7.7 billion to $ 6.4 billion primarily driven by reduced activity in the Lower 48. And the full year guidance for its operating cost has been …show more content…
about 60 % of the company's market capitalization. The company issued a total of $ 2.4 billion of new debt in 2015. The debt to EBITDA ratio stood at 3.4 while total debt to equity stood at 62 % at year-end which shows the company substantially leveraged.
Further, the company already sold $ 2.2 billion worth of assets 2015. And with oil prices not ready to make a come-back even in the minds of the most optimistic analysts now, ConocoPhillips wouldn’t be able to create any substantial long term value for the investors by doing more of it.
Conclusion:
Hence, it is no surprise why the dividend was cut and cut by two-third compared to the preceding quarter. By doing so, it has moved its best foot forward. Out of all the options available for cash conservation, a dividend cut in this hour of crisis should be excused by the investors without more panic than they showed on the day the news was
ConnocoPhillips released its fourth quarter 2015 results on 4th February. The company announced that its board of directors have taken a decision to reduce the company’s quarterly dividend to 25 cents per share, compared with the previous quarterly dividend of 74 cents per share. The dividend is payable on March 1, 2016 to stockholders of record at the close of business on Feb. 16, 2016. This action frees up an incremental $ 2.4 billion in cash. The decision is just one of the actions being taken to maintain its strong balance sheet in response to both the weak outlook for commodity prices and expected credit tightening across the industry.
Under the same action plan the company has also revised its previously disclosed 2016 operating plan. The company has cut its full year guidance for capital expenditure from $ 7.7 billion to $ 6.4 billion primarily driven by reduced activity in the Lower 48. And the full year guidance for its operating cost has been …show more content…
about 60 % of the company's market capitalization. The company issued a total of $ 2.4 billion of new debt in 2015. The debt to EBITDA ratio stood at 3.4 while total debt to equity stood at 62 % at year-end which shows the company substantially leveraged.
Further, the company already sold $ 2.2 billion worth of assets 2015. And with oil prices not ready to make a come-back even in the minds of the most optimistic analysts now, ConocoPhillips wouldn’t be able to create any substantial long term value for the investors by doing more of it.
Conclusion:
Hence, it is no surprise why the dividend was cut and cut by two-third compared to the preceding quarter. By doing so, it has moved its best foot forward. Out of all the options available for cash conservation, a dividend cut in this hour of crisis should be excused by the investors without more panic than they showed on the day the news was