March 23, 2020 / 10:03 PM / 17 days ago

UPDATE 1-Lundin Petroleum cuts dividend by 44% as oil price falls, virus spreads

(Adds CEO quotes, letter to shareholders)

OSLO, March 23 (Reuters) - Sweden’s Lundin Petroleum has cut its proposed dividend for 2019 as it seeks to hold on to more cash to offset crashing oil prices and uncertainty over the coronavirus outbreak, the energy company said on Monday.

The board slashed the proposed payout to $1 per share, equivalent to $284 million, from a previous plan of paying $1.8 per share, or $511 million, ahead of a March 31 shareholder vote.

In a separate statement, Lundin said its business model remained resilient to low prices, and that it would defer non-sanctioned projects in order to preserve cash.

“Our ability to distribute cash to our shareholders in a sustainable way will continue to be based upon our free cash flow generation, debt gearing levels and the medium- to long-term macroeconomic outlook,” Lundin Chief Executive Alex Schneiter said in a letter to shareholders.

Due to the coronavirus outbreak, the company’s board members and executives will participate in the annual general meeting via video link, Lundin said.

Shareholders were encouraged to vote via proxies, and those who attend the meeting in person will be subject to a health screening, the company added.

Oil industry peer Aker BP said earlier on Monday that it intended to continue to pay dividends, but the board still had to assess the impact of the pandemic and oil prices on the company’s balance sheet and liquidity.

Norway’s largest oil and gas firm Equinor said on Sunday it had suspended its ongoing $5 billion share buyback programme due to the same factors.

North Sea oil was trading well below $30 a barrel on Monday, after falling by about 60% since the beginning of the year amid a drop in demand and rising supply. (Reporting by Nerijus Adomaitis, editing by Terje Solsvik and Tom Brown)

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