Anadarko Cuts Dividend 81 Percent to Weather Oil-Price Crash

  • First cut in company's history to save $450 million a year
  • Anadarko joins ConocoPhillips, Marathon in cutting payouts

Anadarko Petroleum Corp. slashed its dividend by 81 percent, joining a parade of oil and natural gas drillers cutting investor payments as they struggle to preserve cash with prices below $30 a barrel.

The cut, the first in the company’s history, reduces payments payable March 23 by 22 cents to 5 cents per share, the company said in a statement Tuesday. The move will save about $450 million a year for Anadarko, the third-biggest U.S. gas producer.

Anadarko followed the lead of drillers such as ConocoPhillips and Marathon Oil Corp. in slashing dividends in the wake of a 70 percent crash in crude prices since June 2014. Companies are also cutting back spending on exploration to maintain cash as losses mount and prices are seen remaining lower for longer. With borrowing costs also rising and their share prices diving, companies are looking to save money wherever they can, said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis.

“More dividend cuts will be coming in the next few weeks," Youngberg said in a telephone interview. “These companies are trying to hunker down and weather the storm and you do what you have to do in tough times."

Anadarko last week said it would cut spending by almost half as The Woodlands, Texas-based company tries to recover from its worst year of earnings since spinning off from Panhandle Eastern Pipe Line in 1986.

Anadarko fell 7 percent to $37.24 at the close of trading in New York on Tuesday. The shares have slid 55 percent in the past year. Crude oil futures on the New York Mercantile Exchange sank 5.9 percent to close at $27.94 a barrel.

"We believe this adjustment to our dividend is the appropriate action to take in the current environment," said Al Walker, Anadarko chairman and chief executive officer, in the statement. The board “will continue to evaluate the appropriate dividend on a quarterly basis."

ConocoPhillips announced a reduction in its dividend earlier this month to 25 cents from 74 cents. Marathon cut its dividend to five cents from 21 cents in October.

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