As stated in Equinor’s dividend policy, when deciding on upcoming dividend payments it takes into consideration expected cash flow, capital expenditure plans, financing requirements, and appropriate financial flexibility.
According to the company’s Thursday statement, Equinor decided to make a significant reduction of the quarterly cash dividend for the first quarter of 2020 which reflects the current “unprecedented market conditions and uncertainties”.
Eldar Sætre, president and CEO of Equinor, said: “Equinor has already taken forceful actions to strengthen our liquidity and financial resilience under the current circumstances.
“In this extraordinary market situation, we have now also decided to reduce the cash dividend for the first quarter of 2020 by 67 per cent, compared to the proposed fourth quarter 2019 dividend”.
In addition to this, Equinor recently launched several actions to increase financial resilience in response to the current market conditions. Namely, it suspended the buy-backs under the share buy-back programme, as well as a bond issuance of $5 billion.
The company also launched a $3 billion action plan in 2020 to strengthen financial resilience from capital expenditures, operating costs, and exploration expense reductions.
Equinor added that the purpose of the combined efforts, including a reduction in dividend, was to secure balance sheet capacity, strengthen liquidity, and support continued investments in a high-quality project portfolio. This provides for long-term competitive growth and shareholder value.
With the previously announced actions, Equinor can be organic cash flow neutral before capital distribution in 2020 with an average oil price around $25 per barrel for the remaining part of the year.
It is worth noting that the ex-date for the first quarter dividend will be 14 August 2020.
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