August 26, 2020 Read More →

Oil companies lose revenue while paying out billions in dividends

International Business Times:

Dividends paid to shareholders by five of the largest oil companies in the world in the second quarter pushed these firms into precarious positions.

The Institute for Energy Economics & Financial Analysis, or IEEFA, reported that the so-called supermajors – ExxonMobil (XOM), Royal Dutch Shell (RDS-A), BP plc (BP), Chevron (CVX), and Total (TOT) – in the aggregate paid out $16.9 billion more to shareholders than they generated from their core business operations in the quarter. They compensated for this gap through borrowing and asset sales.

ExxonMobil, which was just kicked out of the Dow Jones Industrial Average after more than 90 years, incurred “sharply negative” free cash flows while conducting “massive borrowing” in order to sustain its shareholder dividends.

Exxon Mobil declared a cash dividend of 87 cents per share, the same level as in the prior quarter. But the company also reported a $1.1 billion second-quarter loss (its second straight quarterly loss) and warned of further spending cuts.

Exxon Mobil is estimated to pay out about $15 billion in annual dividends. 

[Palash Ghosh]

More: Despite Incurring Huge Losses, Exxon, Chevron, BP, and Other Oil Giants Still Pay Dividends

Posted in: IEEFA In the News

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