Suncor Energy is axing its quarterly dividend by 55 percent to reduce its cash breakeven to a WTI Crude price of US$35 a barrel, one of Canada’s biggest oil firms said on Wednesday.
Suncor made the statement when reporting a huge Q1 loss due to impairments stemming from the low oil prices.
“[A]fter 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,” Mark Little, president and chief executive officer at Suncor Energy, said in a statement.
Suncor Energy’s Board has decided to cut the quarterly cash dividend by 55 percent to US$0.15 (C$0.21) per common share.
As early as in March, Suncor announced cuts to its oil production and spending for this year, as did all Canadian, American, and international oil companies in response to the oil price collapse.
Today, Suncor said that “At a WTI price of US$35 per barrel, all planned operating and administration costs, sustaining capital and dividends can be covered from operating revenue, once demand returns.”
Suncor reported today a net loss of US$2.5 billion (C$3.525 billion) for Q1 2020, compared to net earnings of US$1.05 billion (C$1.470 billion) for the prior-year quarter, due to low oil prices and non?cash after?tax asset impairment charges.
“The company’s results in the first quarter of 2020 were impacted by the significant weakness and volatility in commodity prices, compared to the prior year quarter, as a result of the COVID?19 pandemic and OPEC+’s initial plan to increase production,” Suncor said in an unsurprising recap of the events in Q1 which was the highlight of every oil firm’s results release this earnings season.
Suncor joins other Canadian and major international companies that touched the dividend to protect their balance sheets in the current weak operating and price environment. Cenovus Energy, for example, announced last week a temporary suspension of the dividend after swinging to a Q1 loss, while Husky Energy slashed dividends by 90 percent as it also posted a loss. Last week, Shell announced its first dividend cut since World War II.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.