Civeo slides after company suspends dividend, warns on earnings as oil prices plunge

MarketsAssociated Press

Shares of Civeo plunged nearly 40 percent after the work-force accommodations company suspended its dividend and surprised Wall Street with a lower-than-expected 2015 forecast that it blamed on sliding global energy prices.

Benchmark European and U.S. crude oil prices hit five-year lows Tuesday morning, continuing a months-long decrease that picked up speed in November.

Continue Reading Below

Civeo Corp.'s services include lodging for energy workers in remote locations including oil sands fields in Canada, mines in Australia and shale-field operations in the United States. The company said Monday after markets closed that major oil companies are cutting their capital budgets for next year in reaction to the sinking price for their product, and that was reducing development spending in Canadian oil sands, a major business area for Civeo.

Civeo expects 2015 capital expenditures to range from $75 million to $85 million, a steep drop from estimated 2014 totals of about $260 million to $280 million.

The Houston company said it had to react to these factors, as well as weakness in the Canadian and Australian dollars.

Civeo paid a quarterly cash dividend of 13 cents per share earlier this month, but it said Monday that its board unanimously decided to suspend future payouts to give the company more financial flexibility.

Civeo also said 2015 earnings before interest, taxes, depreciation and amortization or EBITDA, will range between $135 million and $160 million on between $540 million and $600 million in revenue.

Analysts forecast, on average, EBITDA of $261.9 million on $817.2 million in revenue, according to the data firm FactSet.

The company had said in September that it expected "materially" less revenue next year.

Shares of Civeo Inc., which was spun off from Oil States International Inc. earlier this year, were down $3.27 to $5 before markets opened Tuesday.