Exco Resources Inc. said Monday that it has suspended its cash dividend due to a fall in oil prices, which sent its shares down sharply.
The Dallas-based oil and natural gas company said that it will reinvest the money that it would have spent on the dividend into the company. Exco CEO Jeff Benjamin said that the board determined this would benefit shareholders the most, given the recent decline in oil prices and oil and natural gas companies’ securities.
Exco said that it is currently developing its 2015 budget and the money saved by not delivering a dividend will help “unlock additional value” from its assets, particularly its development of natural gas assets in East Texas.
A number of oil companies have reduced their capital spending or made other adjustments given an oversupply of oil and a drop in oil prices.
Global oil supplies are high due to rising production in the U.S., while demand is relatively weak because of slow economic growth. That is creating a glut of oil and lower crude prices, and it is causing oil companies to scale back drilling plans for next year.
Shares of Exco fell 7 cents, or 3.2 percent, to $2.17 in afternoon trading, outpacing a broader market dip.