BP like other oil companies reported poor earnings, but continued to pay steady dividends. Can this trend continue?
Troubles for oil and gas companies continue in 2016 as oil prices remain highly volatile. The first quarter (1Q) results of the energy companies saw drastic fall in profits and revenues. The norm, quite common in the oil and gas space, was the declining capital expenditures (Capex), asset divestitures, and workforce redundancies. However, another commonality that remained in the space, was that of dividends.
Investors of oil and gas have been accustomed to high dividends. Crude oil supply generally has remained weak in the past and prices have remained high. Before the collapse of oil prices in July 2014 ($110–115 per barrel), oil and gas companies had strong balance sheets and profitability profiles. However, the companies’ cash flows soon followed the fall of oil prices.
Some companies, including ConocoPhillips (COP) have managed to cut dividend, but most of them still remain resilient and continue to maintain dividends in hopes that the markets will recover soon. One such company that continues to be consistent with this policy is BP plc. (ADR) (BP). While most energy companies only had to bear the onslaught from the declining crude oil prices, the formerly known British Petroleum company had far more on its table...
Source: Bidness Etc