Oil field giant slashes dividend

Industry collapse results in 75 percent cut by Halliburton

Houston oil field service giant Halliburton on Wednesday said it will slash its dividend by 75 percent as the company continues to find ways to cut costs during the historic oil crash.

Halliburton’s board of directors said the company would pay a second-quarter dividend of 4.5 cents per share, down 75 percent from 18 cents per share in the first quarter. The next quarter’s dividend will be the company’s lowest since it was 1.07 cents per share in the first quarter of 1986.

The board also approved a 20 percent reduction to the annual retainer for its members. The move follows salary cuts for members of the board’s executive committee.

The cost-cutting is another response to the economic fallout of the coronavirus pandemic, which wiped out demand for oil and drove down the price of U.S. crude, which settled Wednesday at $33.49.

The result for Halliburton has been a sharp reduction in demand for its products and services, especially in U.S. shale plays, leading to a $1 billion first-quarter loss after writing down $1.1 billion worth of assets.

Halliburton responded by slashing at least 5,000 jobs since the beginning of the year, including 1,000 at its Houston headquarters, and furloughing thousands of others. It cut $800 million from its capital budget over the past few months, cut executive pay and reduced employee benefits.

The dividend cut could save the company $475 million per year, said Bill Herbert, an oil-field service company analyst with Houston energy investment bank Simmons Energy. The savings, he said, could be used to reduce debt.

“Halliburton has repeatedly asserted that it would not live outside of free cash flow in order to support the dividend and would,

accordingly, review the dividend quarterly,” he said.

The quarterly dividend has long been sacrosanct in the oil industry, which has relied on the payouts to attract investors. Even in this historic collapse, Shell so far stands alone among the world’s largest oil companies in cutting its dividend, reducing it by two-thirds.

But smaller industry players haven’t been so committed. Among them: Apache and Targa Resources reduced their dividends by 90 percent, Occidental cut its by 86 percent, and Marathon Oil temporarily suspended its payout.