- SunCor Energy (TSX:SU) has cut its quarterly dividends by 55 per cent, due to the historically low oil price’s impact on its operations
- The dividend is being lowered to C$0.21 and is payable on June 25, 2020
- An already poor oil price, which dropped earlier this year amid a trade war between OPEC+ nations and Russia, has now been exacerbated by the COVID-19 pandemic driving down demand for oil
- Consequently, the company has already reduced its operating costs by $1 billion and cut $1.9 billion off its original 2020 budget
- SunCor Energy (SU) is down 1.68 per cent, with shares trading for $22.89 and a market cap of $35 billion
SunCor Energy (TSX:SU) has cut its quarterly dividends by 55 per cent, due to the historically low oil price’s impact on its operations.
The dividend is being lowered to $0.21 cents and is payable on June 25, 2020.
Earlier this year, negotiations between Russia and OPEC+ nations broke down, resulting in a number of countries uncapping oil production. This flooded the market and drove common oil price benchmarks to historic lows.
Despite recapping production last month, the flooded market has now been exacerbated by a drop in oil demand caused by the COVID-19 pandemic.
Suncor expects the depressed oil price to remain low for the next one to two years. As a result, the company has already reduced its operating costs by $1 billion and cut $1.9 billion off its original 2020 budget.
President and CEO of Suncor, Mark Little, believes the dividend cut is necessary, given the poor commodity prices in the industry.
“Suncor’s Board of Directors remains committed to leveraging our long life, low decline resource base and providing the energy that society needs, while continuing to return value to shareholders.
“However, after taking significant action in reducing capital and operating costs, the Board believes that reducing the current level of dividends is required to drive down the cash breakeven of the company to a WTI price of US$35 per barrel,” he said.
Mark went on to say that the dividend cut, along with the company’s other cost saving measures, will position Suncor to outperform competitors as markets improves.
SunCor Energy (SU) is down 1.68 per cent, with shares trading for $22.89 at 2:47pm EDT.