Shell stock took a 13% spill Thursday after slashing its dividend.
Oil stocks face a monumental “crisis of uncertainty” in this recession.
But an even bigger existential threat to oil is looming ahead.
The oil price collapse just obliterated Shell’s dividend.
It’s alarming news for oil stock investors because even the 2018 and 2014 oil price crashes didn’t wipe out 66% of Shell Oil Company’s dividend.
Indeed, this is the first time Shell has cut its dividend since 1945:
The energy giant told its shareholders, including thousands of retail investors and pension funds, that it would be in their best interests for payouts to fall for the first time in almost 80 years. The payout is being cut by 66%, from $15bn last year to $5bn this year.
Shell is the U.S.-based subsidiary of Royal Dutch Shell, which until now, had the highest dividend-paying stock on the London FTSE-100.
Shell CEO Ben van Buerden warned the oil company faces a “crisis of uncertainty.”
In response, Shell stock (NYSE:RDS.A) crashed 13% in Thursday trading. British Petroleum (NYSE:BP) took a 6% spill, but Exxon Mobil (NYSE:XOM) managed to escape the worst of the fallout, with a 2.5% decline.
Exxon reports first-quarter earnings Friday. The Irving, Texas-based oil conglomerate is expected to post earnings of 4 cents per share on $53.5 billion in revenue. That would be a 15.8% decline over last year’s first-quarter revenues of $63.6 billion.