Whitecap Resources Inc. (TSX: WCP) is a Calgary, Canada-based company engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids in Western Canada.
WCP shares have surged in trading today even as the company announced a 38% reduction in its monthly dividend. At last check, WCP shares were trading 8.71% higher at $8.86 on volume of 5.42 million, which is more than double the daily average volume.
WCP today announced that it is reducing its monthly dividend by 38% to $0.0233 per share ($0.28 per share annually) from $0.0375 per share ($0.45 per share annually). The company said that the revised dividend will give it increased financial flexibility in the event that low oil prices persist for longer than anticipated. WCP noted that in case commodity price increase, the dividend cut will give the company the ability to improve its balance sheet, increase production per share growth or raise the dividend.
Investors have welcomed the decision to cut the dividend, given how WCP shares have surged in trading today. Prior to the dividend cut, WCP was offering a yield of more than 5%. Following the cut, WCP will still be offering a respectable yield of 3.5%.
