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Cutting the dividend would have a big impact in Britain, where the company accounts for about an eighth of dividend payments from companies in that country's blue-chip stock index, providing crucial income for retirees. In addition, about 40 percent of BP's shareholders are based in the U.S. BP, which earned more than $16 billion last year, said Thursday that the cost of the clean-up and containment efforts had now hit $1.43 billion. Speaking to investors last week, CEO Tony Hayward wouldn't estimate the total bill, though he told analysts that minority partners in the rig would be expected to pay as well. BP stressed on Thurday that it had "significant capacity and flexibility" to deal with ongoing costs, underlining its additional cash flow, strong debt to equity ratio and proven reserves. The company reminded investors that it had indicated in March -- before the explosion at the Deepwater Horizon rig
-- that its cash inflows and outflows were balanced at an oil price of around $60 per barrel. It said its gearing was currently below the bottom of its targeted range and its asset base was "strong and valuable." The company had more than 18 million barrels of proven reserves and 63 billion barrels of resources at the end of 2009. The share price falls in London and New York have wiped out around half the company's market value.
Killik & Co. analyst Jonathan Jackson said the shares would remain very volatile until there was a clearer idea of the potential cost but he remained positive on the stock. "Despite the high risk involved in adding to holdings in the short term and the possibility of a temporary suspension of the dividend, we would continue to do so," he said.
[Associated
Press;
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