Page 15 - NorthAmOil Week 20

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Halliburton slashes dividend by 75% in response to oil price crash
US
OILFIELD services firm Halliburton has said that it is slashing its dividend from $0.18 per share in the first quarter of 2020 to $0.045 per share in the current quarter. The move comes as the company adjusts to oil prices of around $30 per barrel – assuming more price volatility can be avoided.
This will be Halliburton’s lowest dividend rate since the first quarter of 1986, when the company paid out $0.0107 per share. The cut is estimated to save the company around $475mn per year, according to a Simmons Energy oilfield service firm analyst, Bill Herbert.
“Halliburton has repeatedly asserted that it would not live outside of free cash flow [FCF] in order to support the dividend and would, accordingly, review the dividend quarterly,” Herbert was quoted by the Houston Chronicle as saying.
The dividend cut comes shortly after Halli- burton laid off 1,000 employees at its Houston headquarters earlier in May, having already
reduced its capital spending budget for 2020. The company, which had earlier furloughed 3,500 employees in Houston, attributed the lay-offs to an “unforeseeable” market downturn.
“The reductions are in addition to lay-offs across the company’s global operations,” Hall- iburton said in a statement. “These actions are difficult but necessary as we adjust our business to customers’ decreased activity.”
US oil industry players are taking varying approaches to dividends during this time. While cutting dividends would result in cost savings, some upstream and integrated companies have expressed a desire to protect their dividends as much as possible.
Schlumberger, the US’ largest oilfield ser- vice provider, also cut its dividend by 75% in recent weeks, to $0.125 per share, from $0.50 per share previously. At the time, Bernstein analysts described the dividend cut as a “monumen- tal decision from the management team – and exactly the right one”.™
POLICY
Continental seeks relief in North Dakota
NORTH DAKOTA
SHALE driller Continental Resources has called on North Dakota’s energy regulators to inter- vene as the oil industry struggles to survive the coronavirus (COVID-19) pandemic, which has exacerbated an existing oversupply.
“North Dakota can be a leader as far as action is concerned,” a Continental vice-president, Blu Hulsey, said, adding that the state would not need “to take large action to make a difference.” The comments were made at a May 20 hearing.
Continental is the largest producer in North Dakota. However, while it may be able to wield considerable influence, not everyone supports its call for state intervention. Those asking reg- ulators not to intervene include the American Petroleum Institute (API) and the North Dakota Petroleum Council (NDPC).
“When there is one action by the govern- ment, there are three or four unanticipated actions,” said the NDPC’s president, Ron Ness.
North Dakota has become the third US state to consider helping its oil industry. Texas rejected
a proposal to impose state-level output limits earlier this month, while Oklahoma has adjusted its regulations to allow producers to shut in wells more easily without losing leases. Oklahoma – a state in which Continental has its headquarters, as well as operations in the Anadarko Basin – is also considering two separate applications for intervention aimed at stabilising markets.
Indeed, North Dakota already considered other measures in April, including paying oper- ators to restart wells. At the time, regulators remained opposed to mandatory production limits.
North Dakota’s crude production – compris- ing the bulk of output from the Bakken play – has fallen by 510,000 barrels per day (bpd) since oil prices collapsed in mid-March.
Continental was recently reported to have effectively halted most of its production in North Dakota. This was followed by the company say- ing, when it released its first-quarter results, that it had curtailed around 70% of its May output.™
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