- Vermilion Energy (TSX:VET) has further reduced its dividends to just 2 cents per share
- Dividends were previously announced to be 23 cents, but have been progressively cut down
- The company also announced an additional C$20 million reduction to its capital budget for this year
- The revisions come after significant decreases in oil prices as a result of COVID-19 and the OPEC+ oil price war
- Vermilion Energy (VET) is currently down 6.28 per cent to $4.48 per share
Vermilion Energy (TSX:VET) has announced yet another reduction to its monthly dividends, which will now be 2 cents per share.
The company originally posted payable dividends at 23 cents, according to a February 18 release.
A March 6 announcement then revealed that this would be cut by 50 per cent to 11.5 cents per share. Now, however, dividends have been slashed by a further 82.6 per cent.
The new dividend amount will be implemented in April and payable in May.
In addition to the dividend cuts, Vermilion also said that it will be reducing its 2020 capital budget by C$20 million.
The revisions come after a momentous slide in oil prices as a result of COVID-19 and the OPEC+ member oil price war, and companies around the world have taken a beating.
Current forecasts suggest that crude oil prices could fall to less than US$10 per barrel for the first time in over 20 years.
Despite the grim market conditions, Vermilion is maintaining a moderately positive outlook.
“While we continue to believe the long-term fundamentals for the oil and gas industry are sound and will lead to higher prices in the future, we cannot predict how long the impact from COVID-19 and the OPEC+ price war will continue,” the company said.
“As we stated in our Q4 2019 release, in the event that we experienced an even more pronounced and protracted commodity downturn due to COVID-19 or any other cause, we would be attentive to all forms of cash outlays to protect Vermilion’s financial position.”
Vermilion reaffirmed that the reductions in its annual cash outlay will provide greater flexibility in negotiating the current period. The company also added that it will examine further adjustments as and when they arise.
“Vermilion fully intends to exit this period of economic turmoil in a position of enhanced financial strength,” it concluded.
So far, Vermilion says that COVID-19 has had no operational or supply chain impacts.
Shares in the company are currently down 6.28 per cent to $4.48, as of 11:28am EST.