Noble cuts dividend, pares back spending budget

(Spencer Platt/Getty Images)
(Spencer Platt/Getty Images)

Houston oil producer Noble Energy slashed its quarterly dividend, becoming the latest energy company to pare back its regular cash payments to shareholders amid industry-wide cost-cutting.

The exploration and production company lowered the quarterly payment to 10 cents per common share, a reduction of 8 cents, or more than 40 percent. Noble said the move would cut costs in an effort to ride out the worst oil bust in decades.

Noble will also trim its capital program to about $1.5 billion, or half last year’s spending level, joining other oil producers in cutting spending for 2016. But Noble added that the plan will be flexible to deal with continued volatility in oil markets.

“The decision to adjust the quarterly dividend, along with a substantially reduced and flexible capital program for 2016, is part of a comprehensive effort to spend within cash flow and manage the company’s balance sheet,” Kenneth Fisher, executive vice president and chief financial officer, said in a statement.

Despite the lower investment, Noble still expects to produce 390,000 barrels of oil equivalent per day, about the same output as last year. The company will discuss its spending plans further during a conference call with investors Feb. 17 to discuss its fourth quarter financial performance.

Noble said it plans to use the dividend reduction, coupled with its recent debt refinancing, to generate $200 million a year to be used in an effort to reduce the company’s financial leverage.

The company says it remains committed to paying a dividend, adding that its board of directors will reevaluate the payments every quarter.

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