Baytex Energy cutting spending, ending dividend payouts to preserve cash

In this photo released by the New York Stock Exchange, NYSE President and Chief Executive Officer John Thain, third left, joins representatives of Baytex Energy Trust of Calgary, Alberta for the opening bell at the New York Stock Exchange, Monday, March 27, 2006. (Mel Nudelman/AP Photo, NYSE)

CALGARY - Baytex Energy Corp. (TSX:BTE) has announced "difficult but necessary steps" to weather a prolonged oil downturn, including the suspension of its monthly dividend and a drop in spending.

Shares in the Calgary-based oil producer fell as low as $5.50 in Friday trading on the Toronto Stock Exchange, 17 per cent below Thursday's close. By around mid-morning, the stock had gained some ground, down about nine per cent compared to Thursday.

U.S. benchmark crude prices have touched six-year lows over the past week -- around US$41 a barrel. And Baytex said the price of heavy oil, like the type it produces in Alberta, is only about US$25 a barrel.

"It is imperative that we position our company to withstand the current low commodity price environment. We are committed to taking the difficult but necessary steps to ensure the long-term sustainability of our business," CEO James Bowzer said in a release.

Baytex said it's suspending its monthly cash dividend after the Sept. 15 payment of 10 cents per share to avoid having to borrow more money to pay shareholders. With the current outlook, Baytex said it wouldn't be generating enough funds from operations to pay a dividend, but will reinstate it when prices recover.

It's the second time Baytex has slashed its monthly payout to shareholders since oil prices began to plunge late last year. In December, it announced a dividend cut to 10 cents from 24 cents.