The stocks of Civeo Corp (NYSE:CVEO) are falling down. The company, on the last trading day, saw a decline of about 50 percent. The shares came down to a value of $4.07 after the company announced that it would not be paying any quarterly dividends in order to cut down on its expenditures.
The company further said that it is not the only one who has announced this measure. A number of oil companies are taking such measures dur to the falling prices of crude oil. The management said that since the situation is likely to remain the same, Civeo Corp (NYSE:CVEO) had to take this step in order to keep its expenditures as low as possible.
Civeo plans to invest this money in the expansion and development plans on its oil sand in the country of Canada. The company provides accommodation to its workers in the mining and drilling sites that are located in Australia and Canada. Civeo said that it could use the money there.
The company mentioned that it needs to maintain flexibility in its cash and financial situation, and that was only possible if it suspended the quarterly dividends. The company will be using the cash flow to to pay off some of its debts in the year 2015.
Moreover, the headcount of the company was reduced by 30 percent in the country of Canada and by 45 percent in the United States. Civeo expects its expenditure to come to a total of $85 and $75 million in the regions of Canada and United States respectively. It is important to mention here that the expenditures for the previous year was far high than this year’s.
The price of crude oil of West Texas Intermediate dropped to $53 per barrel. This is the lowest price that the region has seen since the year 2009, the month of May to be more precise. The price per barrel was recorded to be at $105 during the month of June, in the very same region.
The Federal Reserve of Dallas released a research report, which showed that the decrease in the prices of crude oil will have negative consequences on the economy of Teas.
The chief executive of Civeo Corp (NYSE:CVEO), Bradley Dodson, during the press conference of Monday, said that it was crystal clear by the fourth fiscal quarter that the falling prices would have to be compensated from some other segment, if the company wanted to stay on its feet. He further said that this step was taken after initial measures failed to cover the gap. The initial measures included discretional capital expenditures, controlled costs, and reduction in marketing capacity.
The company has closed down some of its lodges in Canada, including Lakeside as well as Athabasca in order to reduce the capital spending.
Coming to the stock prices of Civeo Corp (NYSE:CVEO), the company is currently trading at $4.50. It has a market capitalization of $882.69 million with a dividend yield of 13.27 percent.