ConocoPhillips Slashes Dividend, Warns Of "Lower Prices For Longer"; Weatherford Fires 15% Of All Workers

Tyler Durden's picture

Another day, and another round of increasingly uglier news from the global energy sector.

Moments ago, energy giant ConocoPhillips announced it would cut the company’s quarterly dividend to 25 cents per share, compared with the previous quarterly dividend of 74 cents per share. This took place after reporting its biggest quarterly loss in almost a decade as independent oil producers feel the squeeze from the sharp decline in crude prices.

The company also lowered capital expenditures guidance to $6.4 billion from $7.7 billion and operating costs guidance to $7 billion from $7.7 billion.

The commentary from CEO Ryan Lance was dire: "While we don’t know how far commodity prices will fall, or the duration of the downturn, we believe it’s prudent to plan for lower prices for a longer period of time."

"The actions we have announced will improve net cash flow by $4.4 billion in 2016. The decision to reduce the dividend was a difficult one. The dividend has been, and will continue to be, a top priority. We still intend to provide a competitive dividend, while significantly lowering the breakeven price for the company and substantially reducing the level of borrowing in 2016. Our actions also position us to deliver strong absolute and relative performance as prices recover."

The company had previously emphasized it would prioritize maintaining the dividend while being more flexible with capital spending and the balance sheet. 

As quoted by Bloomberg, "The pressure obviously built up on them," said James Sullivan, an analyst at Alembic Global Advisors, who has an “overweight” rating on the share.. "The assumption a lot of us made was that the dividend is not sustainable."

The stock was clearly surprised by the announcement, and was down over 5% in the premarket.

Elsewhere, another energy giant Weatherford International assured that next month's Challenger report would also be ugly, when it announced plans to lay off an additional 6,000 workers, about 15 percent of its workforce, over the first half of this year to cope with the worst crude market downturn in 30 years.

The latest round of cuts brings to 20,000 the number of people who have been or will be let go by the world’s fourth-largest oilfield services supplier as oil prices tumbled by more than two thirds.

"We have geared the company, and will increasingly do so, for a prolonged period of very low activity," Chief Executive Officer Bernard Duroc-Danner said Wednesday in an earnings statement. "We are ready for as protracted a downcycle as markets will dictate."

It appears slowly but surely the realization is dawning on everyone: far lower prices are here to stay, and for a long period of time.

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jtmo3's picture

Good news is good and bad news is gooder!

VinceFostersGhost's picture



You have to buy overpriced Obamacare......and then come up with another $6000 for the deductible.


No one has money for gas.

Vendetta's picture

uh, quit exaggerating .... the deductible was $6500 each for a family of 2 when I looked over the plans last year... went direct with employer to avoid the whole scam of healthcare insurance that isn't affordable in the slightest.

CheapBastard's picture

Moar "Chains you can beleeve in" that's all. Brought to you by Pelosi, Reed and Obama.

Pheonyte's picture

Wonder how long Kyle Bass can keep the faith in his energy dogma.

Bangin7GramRocks's picture

The Chinese just made Kyle Bass's hairline recede another 2 inches!

dogismycopilot's picture

Easy. You need to hold your breath 2 years and be ready to hold it 3. It's too early now, but at some point there will be some very good deals to be had in the oil and gas industry. 


Brain Drain: What is going to happen is you are going to have the last of the Gray Ghosts - the older, seasoned, really smart oil and gas engineers/geotechs/scientists retire now. This was the last huraah for many of them. I saw some 60 year old and even a few 70 year old guys in Iraq who were making $5K a day plus expenses....they were doing the work because they loved it. Now, they are just saying, 'fuck it, time to retire for good and play with the grandkids.' The world will lose a lot of skill with them and not enough new blood.

Middle East War: Sure, the Middle East is flush with oil now. Give it 2 years and I predict they are all chopping each other up with swords again, riding around on camels, and stealing each other's women. (Not literally, this is a euphamism). I do think you will see large scale war (proxy or terror based) in the Middle East on an ongoing basis and it will dent production. Also, the dysfunction will continue and Iran and Iraq and Saudi will not go much higher on production than what they will hit later this year. Security costs will increase exponentionally for oil companies in the Middle East. 

Iraq is now RussoChina: Iraq is now property of either Russia, China or Iran...or all 3. American oil and gas companies will soon be PNG there. This will leave only the offshore fields as the big elephants to hunt. AntonOil basically bankrupted Weatherford in Iraq by winning all of the Lukoil drilling. The US has lost Iraq market.

Demand: World population is growing. They need food. Food comes from oil via diesel and fertilizer that are turned into protein. 

Big Investment: Offshore work is fun, exciting and big investment. 

CheapBastard's picture

When oil drops to $22 I'll buy lots.

ceilidh_trail's picture

Appreciate the viewpoint. It reinforces my own.

Ima anal sphincter's picture

Houston..... we have a problem.

MarkD's picture

Yes..... they need to lower the break even number to $20

yogibear's picture

The gig is up.

Many more dividend cuts coming as stock-buybacks turn into dividend cuts.

Those 5% plus dividends being slashed don't look as good anymore.

two hoots's picture




That is likely the bigger news that few talk about.  Divy cuts for those seeking/hunting yield (individuals/pension funds etc) coupled with low, soon to go negative, saving rates will hurt the fixed income side, further damaging the economy.

Don’t think they will ever come back as most companies would rather be free of shareholders/Wall Street/gov/SEC/Reported Earnings/Filings/regs and run their own show.  The financial world is changing, and quickly.




Last of the Middle Class's picture

... --- ...   ... --- ...  ...---...   This is the Titanic, we're taking on water!!!!!

juggalo1's picture

I wonder what is wrong with ConocoPhillips.  THeyre man in retail and distribtion, right?  So you would think cheaper crude would be a net benefit for them.  Is this a sign the demand side really is pushing oil lower?

I am a Man I am Forty's picture

this is what happens when you spinoff your refining business #phillips66

roadhazard's picture

"Lower oil prices for longer." Only me and the oil companies seem to get it.  Everybody else keeps sitting there waiting for the bounce back. If you don't believe me check out media financial outlets.

WillyGroper's picture

Back door Buffet is salivating.

Tortuga's picture

"worst downturn in 30 years". double BS.

Weatherford Int. still above 1989 high and record and several astronomical profits every year until the current downturn. It's  true of all oil-gas industries.

Google it if you don't believe the current bs about low oil prices causing chaos hasn't happened many, many times before, and gee, it will happen many more times in the future.

No story here.

zeroaccountability's picture

There are 2 Conoco stations CLOSED on two very busy intersections sez will be a 'CVS' store, the other has a big 'For Sale' sign.

I also saw a Conoco gas station for sale in Wyoming on Craigslist.

No depression here.  Move along.

matagorda's picture

But this is actually not bad news as regards Weatherford, because they're headquartered in Switzerland, so all the job cuts will happen there, right?