Rig firm Prosafe Cuts Dividend Target on Weak Oil Sector
OSLO, Nov 5 (Reuters) – Offshore accommodation rig provider Prosafe cuts its near term dividend target on Wednesday as the offshore oil sector continued to weaken on capital spending cuts and a near 30 percent fall in crude oil prices since June.
Prosafe, the world's biggest accommodation rig firm, said spending cuts have delayed several projects on both the British and Norwegian sides of the North Sea, even as the Mexican and Brazilian markets remained healthy.
Oil firms around the globe have been cutting back over the past year, aiming to increase shareholder returns and protect margins amid a slump in oil prices. North Sea projects have proven among the most vulnerable due to high costs in the region.
"In light of the current weak market outlook in the North Sea and the increase in overall supply, the Board of Directors shall focus on strengthening the balance sheet and securing strategic flexibility," it said in a statement.
"Therefore, for the period until the end of 2016 the Board is targeting quarterly dividend payments corresponding to an annual payout ratio in the range of 25 to 35 per cent of the preceding year's net profit," it added.
The firm said that in the long term it aimed for a payout ratio of up to 75 percent, with the dividend normally around 40 to 60 percent of the previous year's net profit.
At 1151 GMT, the firm's shares were down 2 percent, trailing a 1 percent rise in the European oil and gas index.
In the third quarter, Prosafe's operating profit rose 3 percent to $93 million, beating expectations for $88.3 million in a Reuters poll. The firm's order backlog, including options, declined to $2.15 billion from a record high $2.5 billion six months earlier.
(Reporting by Balazs Koranyi, editing by Louise Heavens)
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