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Transocean, one of the world's largest operators of offshore platforms, has announced plans to slash stock dividends, citing the company’s falling revenues amid global oil market turbulence as the reason.
According to a statement issued on Wednesday, the worsening situation of the oil market has wreaked havoc on the Switzerland-based company’s earnings, prompting its managers to cut shareholders’ dividends, AFP reported.
The company announced the decision for scrapping of shareholder payments and an asset impairment of 2.0 billion Swiss francs (USD 2.1 billion, 1.8 million euros) overnight, adding that the decision will be formalized at an extraordinary meeting on October 29.
The news caused Transocean shares to fall by 7.3 percent to 11.30 Swiss francs in trading at 1130 GMT, as Switzerland's main SMI index saw a one-percent decline.
During past months, the company has seen an unprecedented dry-up in its revenues as global oil markets are witnessing the worst oil price collapse in three decades.
Back in 2010, the Deepwater Horizon platform, which was owned and operated by Transocean, caused a massive oil spill off the US Gulf of Mexico. File photo shows platform supply vessels battling the blazing remnants of the offshore oil rig, Deepwater Horizon.
According to Transocean’s statement, the company is planning to cancel the third and fourth installments of its annual dividend payments of 60 cents per share, which was approved by shareholders in May.
"The slash in dividend does clearly not come out of the blue given the company does not get meaningful new contracts and the timing of a market recovery is highly uncertain -- hence it needs to preserve cash," said Fabien Haecki, an analyst at Vontobel, adding, "This comes as no surprise but we advise to stay out of the stock for now."
Transocean shares have fallen by two-thirds over the last year. (