Exxon believes its cash flow will cover capital expenditures and the dividend this year even if Brent oil prices average as low as $45 per barrel and its downstream and chemical businesses maintain their lowest margins in at least a decade. As part of the firm's earnings presentation on Tuesday, management laid out capital allocation priorities through 2025. Exxon's base plan this year expects Brent prices of $50 per barrel, but the firm highlighted its ability to flex its spending on short-cycle shale projects if market conditions change. Management believes this will enable dividend coverage and maintenance of balance sheet strength at Brent prices of $45 per barrel (versus $58 today) while allowing the firm to continue working on its largest and [...]

Chevron on Friday reported fourth-quarter earnings and showed continued progress improving the sustainability of its dividend in a low oil price environment. Driven by capital spending reductions and lower operating expenses, Chevron's breakeven oil price required to cover its capital program and dividend was under $50 per barrel for the second quarter in a row. That's down from $55 per barrel in 2019 and the $80s not long before that.  Chevron's breakeven price is especially impressive since it includes the poor performance of its downstream and chemicals businesses, which normally account for around 20% of firm-wide profits.  These cyclical divisions barely broke even last year since they are experiencing very low margins and weak volumes compared to their historical norms. Assuming they [...]

PPL last August announced plans to sell its U.K. utility operations, which generate a little over half of the firm's earnings. No deal has been announced yet, but the fate of PPL's regular dividend depends on how much of these earnings management can replace by using some of the proceeds from a potential sale to acquire a U.S. utility. For more information on PPL's divestiture plans, please see our note here. When PPL announced its plans, management expected to reach a deal in the first half of 2021. The company has not issued any updates on the sale process since August, but in November Reuters warned that a deal could be delayed due to uncertainty over whether the U.K. will leave the European [...]

Macro headwinds, slow-moving restructuring plans, and mounting legal liabilities have weighed on 3M's performance since CEO Michael Roman took the top job in July 2018. On Tuesday, the industrial conglomerate reported earnings which gave investors more confidence in 3M's plan to return to profitable growth following sales and earnings declines the last two years. Organic sales grew 6% in the fourth quarter, margins expanded, and free cash flow increased 16%. 3M's Safety & Industrial segment (34% of sales) reported 13% revenue growth thanks to strong pandemic-related demand for its respirator masks and air filters, but other parts of the business improved as well. Transportation & Electronics (25%) returned to growth after a challenging last two years, and Health Care (25%) delivered a 7% sales [...]