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
