Oil services company Schlumberger (SLB) will cut its dividend by 75.0 percent to $0.125 per share in 2020. The company did not raise its quarterly dividend in the last five years with the latest increase of 25% to $0.50 per share dating back to April 2015.

The next dividend will be paid on July 9, 2020 to shareholders of record on June 3, 2020. The new annualized dividend rate of 50 cents per share yields 3.3% at a stock price of $15.28.

In the company´s press release announcing the first quarter 2020 results Schlumberger CEO Olivier Le Peuch commented: “In view of the uncertainty of the depth and extent of the contraction in oil demand due to the COVID-19 pandemic combined with the weaker commodity price environment, we have turned our strategic focus to cash conservation and protecting our balance sheet. We have therefore taken the prudent decision to reduce our dividend by 75%. The revised dividend supports Schlumberger’s value proposition through a balanced approach of shareholder distributions and organic investment, while providing the flexibility to weather the uncertain environment. This decision reflects our focus on our capital stewardship program as well as our commitment to maintain both a strong liquidity position and a strong investment grade credit rating that provides privileged access to the financial markets."

Schlumberger has been hit hard by the falling oil price with many energy companies cutting their budgets and capex, also hurting service providers. Schlumberger had been very generous to its shareholders for decades, with double digit dividend hikes from 2011 until 2015. Following this big dividend cut the annual dividend payment to shareholders will drop to $694 million, saving Schlumberger more than $2 billion in dividend payments annually.

Schlumberger NV is a provider of technology for reservoir characterization, drilling, production, and processing to the oil and gas industry. The company operates worldwide and provides a range of products and services, from exploration through production, and integrated pore-to-pipeline solutions that optimize hydrocarbon recovery to deliver reservoir performance sustainably. Schlumberger has paid a quarterly dividend since 1957. The original Schlumberger business was founded in 1926 by the brothers Conrad and Marcel Schlumberger, two French engineers and physicists, to provide wireline logging services (electronic measurement of underground formations) for oil drilling operations. Schlumberger incorporated was incorporated on November 6, 1956 in the Netherlands Antilles.