The leading global oil companies have fulfilled their promises to protect dividends, despite the fact that earnings fell and companies cut expensive projects due to the slump in oil prices.
In the first three quarters of the year, the four supermajor oil companies – Royal Dutch Shell PLC, Chevron Corp, BP PLC and ExxonMobil Corp. – have all witnesses a fall in their collective earnings of over 70% compared to 2014. However, in the same period, they have handed almost $28bn (£18.4bn) to their shareholders, which represents an increase of around 10% from the same period in 2014.
Speaking about the high oil dividends at a conference in Abu Dhabi, Patrick Pouyanne, the chief executive of French company Total SA, which is the world’s fourth largest oil producer, said:
“The dividends and payouts to shareholders have no reason to be as volatile as the oil price.”
He also commented that it would be a “terrible mistake” to remove dividends, and that a drop would imply that oil companies were not good at their business.
Oil prices are presently trading a little above $40 (£26.28) per barrel, which is the lowest they have commanded since August, and it is not thought that they will rise above $60 (£39.43) per barrel until 2017. These figures have led to speculation of a potential cash crunch at oil companies and what this could mean to the price of products like Shell Tellus S2 M 46, but global oil firms have said that they are taking measures to address this while ensuring investors are kept on board with good dividend payments.