Influential shareholder group PIRC calls into question Schlumberger's ability to cover proposed dividend payout ahead of oil firm's annual meeting

Francesca Washtell
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Schlumberger saw significant losses in its 2015 financial results (Source: Getty)

The influential shareholder group PIRC has called into question Schlumberger's ability to cover a proposed dividend payout ahead of the oil firm's annual meeting.

In an alert today PIRC said that Schlumberger's proposed cash dividend of $2 per ordinary share "is not covered by earnings", and recommended that shareholders cast an "oppose" vote on the group's financial statements and dividend declaration.

The recommendation comes a week after the Dutch oilfield services firm announced its pre-tax profit fell by 38 per cent in 2015. Year-on-year revenue fell by 27 per cent, while its pretax operating income fell by 22 per cent from $7.7bn (£5.4bn) to $6bn.

Oil companies have suffered from the fall in global oil prices that has seen the price of Brent crude plummet from over $100 a barrel in July 2014 to around $40 at present. The energy industry has recently been warned that high supply and slowing demand remain a risk to price stabilisation, despite Brent crude and West Texas Intermediate (WTI) prices increased slightly after producers announced a meeting will be held in mid-April to discuss an output freeze.

PIRC has also recommended a number of "oppose" votes for board representatives. It recommends non-executive directors Nikolay Kudryavstev, Michael E Marks, Tore I Sandvold and Leo Rafael Reif be voted against.

An oppose vote is also recommended for Henri Seydoux, who is being considered as an independent non-executive director, as he "has family ties to the founding Schlumberger family".

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