BHP faces dividend cut as oil price falls

THE oil price rout has taken its toll on the world’s largest mining company as it announces a £5bn write off of its US shale operations amid speculation it will cut its dividend.

BHP Billiton said although it had slashed costs and reduced the number of its US onshore shale oil rigs by 21 to just five, the oil price slump forced it into the multi-billion-pound write down. Miners have been struggling with the collapse in the price of commodities such as iron ore but BHP has a greater exposure to oil than its peers.

The oil price has fallen below $30 a barrel from a June 2014 high of $115 and the collapse has left the higher cost US onshore oil sector largely unaffordable.

Chief executive Andrew Mackenzie said he was confident of prices rising in the longer term.

However analysts are predicting BHP will reduce its dividend this year.

Russ Mould, investment director at stockbroker AJ Bell, said: ‘A cut to the forecast 2016 pay out looks a strong possibility.’

Shares fell 6.39pc to 615p at the close yesterday.