ONEOK has announced plans to reduce its 2020 capital spending by $500 million after the coronavirus pandemic destroyed world demand for oil and the Russia-OPEC price war deepened the crisis, but one thing it won’t be slashing is its dividend.
The company has announced it’s keeping this quarter’s annualized dividend the same as it was in the previous quarter, at 93.5 cents per share. That’s an annualized dividend of $3.74 per share.
It will be paid out May 14 to shareholders of record at the close of business on April 27.
ONEOK is a Fortune 500 company and the Bakken’s largest midstream service provider. It also has an extensive network of infrastructure in the Mid-Continent and Permian regions as well.
ONEOK President and Chief Executive Officer Terry K. Spencer said despite market uncertainty, he’s confident this is the right move for the company.
“ONEOK’s dividend payout is supported by our strong balance sheet and healthy dividend coverage,” he said. “Holding the dividend at the current level is the prudent financial decision for ONEOK during this time of market uncertainty. Our integrated and extensive assets and financial strength position us well for an industry recovery once energy markets stabilize.”
ONEOK’s planned 2020 expenditures, after delaying Demicks Lake III and reducing the scope of the Elk Creek pipeline is expected to be somewhere between $1.6 to $2.4 billion, according to the company’s latest guidance.
Demicks Lake was to process 200 million cubic feet per day more natural gas, and the Elk Creek pipeline will take NGLs to Kansas for further processing.
Both of those projects can be resumed quickly at need, Spencer has said.
The company also put off expansion of a 100,000 barrel per day pipeline int he Permian as well
Spencer has said he believes the Bakken, which produces light sweet crude, will remain one of the competitive producing regions despite the volatility and uncertainty in the market.
“Given the significant inventory of flared natural gas in the Williston Basin and fully contracted growth in the Permian Basin, and factoring in the current commodity price environment and assumed rig reductions, we expect our 2020 results to be within our previously announced guidance ranges,” Spencer said when the cuts were announced. “We are working with our producers on any updates to their drilling plans and evaluating the impact on our future volume expectations, and we will make adjustments to financial guidance if appropriate.”