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Oil E&Ps Halts Dividends: Vermilion Energy Joins the Club
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Vermilion Energy Inc. (VET - Free Report) recently suspended its monthly dividend payout to preserve cash and maintain liquidity in the wake of weak global energy demand due to the coronavirus pandemic. With this strategic move, the company plans to spend the saved amount on reducing its financial leverages. The dividend postponement is effective Apr 15.
With the coronavirus spread showing no signs of subsiding, most companies across the world are undertaking compensatory measures to tackle the situation. These industry players are not only stalling their dividends but also focusing on other cost-cutting actions.
Further adding to its woes is the status of the Canadian oil market, which is in complete disarray. Heavy Canadian crude, which usually trades at a discount with U.S. West Texas Intermediate oil, seems sinking after the country’s oil-sand producers were required to halt maintenance activity, thereby clogging the market with possible surplus supply.
In response to the bearish oil environment, last month, Vermilion Energy trimmed its monthly dividend from the prior payout of 11.5 Canadian cents to 2 Canadian cents per share and curbed 2020 spending budget following a dip in oil prices. Starting March, this Calgary-based oil-and-gas producer managed to lower its cash deployment for capital investments and dividend payouts by C$520 million. The company also came up with new strategies that have potential to save costs up to worth C$30 million.
For cash holding and liquidity sustenance, this Zacks Rank #3 (Hold) company follows various other E&P players in the energy sector that are resorting to dividend cancellations and capex cuts. Citing the uncertainty around the coronavirus pandemic, Continental Resources, Inc. , EQT Corporation (EQT - Free Report) and Apache Corporation (APA - Free Report) among others also announced plans to defer or slash their dividend distributions and trim capital budgets. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Given the growing possibility of a depression in 2020, cash seems the principal factor for businesses and investors. Therefore, amid the coronavirus crisis, many companies might be forced to make rigid moves for cash conservation. So, until normalcy resumes, investors should brace up for more capex reductions and dividend payout delays.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Oil E&Ps Halts Dividends: Vermilion Energy Joins the Club
Vermilion Energy Inc. (VET - Free Report) recently suspended its monthly dividend payout to preserve cash and maintain liquidity in the wake of weak global energy demand due to the coronavirus pandemic. With this strategic move, the company plans to spend the saved amount on reducing its financial leverages. The dividend postponement is effective Apr 15.
With the coronavirus spread showing no signs of subsiding, most companies across the world are undertaking compensatory measures to tackle the situation. These industry players are not only stalling their dividends but also focusing on other cost-cutting actions.
Further adding to its woes is the status of the Canadian oil market, which is in complete disarray. Heavy Canadian crude, which usually trades at a discount with U.S. West Texas Intermediate oil, seems sinking after the country’s oil-sand producers were required to halt maintenance activity, thereby clogging the market with possible surplus supply.
Vermilion Energy Inc. Price
Vermilion Energy Inc. price | Vermilion Energy Inc. Quote
In response to the bearish oil environment, last month, Vermilion Energy trimmed its monthly dividend from the prior payout of 11.5 Canadian cents to 2 Canadian cents per share and curbed 2020 spending budget following a dip in oil prices. Starting March, this Calgary-based oil-and-gas producer managed to lower its cash deployment for capital investments and dividend payouts by C$520 million. The company also came up with new strategies that have potential to save costs up to worth C$30 million.
For cash holding and liquidity sustenance, this Zacks Rank #3 (Hold) company follows various other E&P players in the energy sector that are resorting to dividend cancellations and capex cuts. Citing the uncertainty around the coronavirus pandemic, Continental Resources, Inc. , EQT Corporation (EQT - Free Report) and Apache Corporation (APA - Free Report) among others also announced plans to defer or slash their dividend distributions and trim capital budgets. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Given the growing possibility of a depression in 2020, cash seems the principal factor for businesses and investors. Therefore, amid the coronavirus crisis, many companies might be forced to make rigid moves for cash conservation. So, until normalcy resumes, investors should brace up for more capex reductions and dividend payout delays.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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