BP Protecting Dividend Even If Means Borrowing To Pay For It


BP’s CEO, Tony Hayward, tells the Wall Street Journal that he’ll protect the company’s dividend and investment in production, even if he has to borrow money to pay for it.

BP needs oil to be at $60 a barrel to cover its capital spending and dividend pay out. And with oil hanging between $40 and $45, the company might have to borrow money to maintain its dividend and investment.

While it sounds like a bad idea to borrow money–especially in this environment–to maintain the dividend, BP’s CEO Tony Hayward defends the idea saying that the company’s debt to equity ratio is rather low at just 21%. Further, the company was able to raise $4.6 billion in bonds last fall when its was a tough market.

However, now the economy is even worse and the company is telling the world that it won’t be profitable this year unless oil lifts considerably, which makes us think fewer people are going to place a bet on the price of oil lifting.

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