BP silent on future of dividend

BP management angered investors and environmentalists alike onFriday by refusing to comment one way or another on the future of its dividend.

The embattled oil titan, whose shares have lost roughly 40 per cent of their value since the Deepwater Horizon oil rig sank on April 22, has come under extreme scrutiny for its handling of the subsequent oil spill.

The company's dividend payment has become the focus of late, as BP has to stickhandle through the issue of finding the cash to reward its shareholders while mitigating the poor optics of doing so.

"Future decisions on the quarterly dividend will be made by the board, as they always have been, on the basis of the circumstances at the time," BP chair Carl-Henric Svanberg said Friday, attempting to sidestep the controversy.

U.S. legislatorsand environmentalists argue the company should be focusing all of its resources and assets toward stopping the leak and cleaning up the mess, not paying out billions to shareholders.

"We find it unfathomable that BP would pay out a dividend to shareholders before the total cost of BPs oil spill cleanup is estimated," New York Democratic Senator Chuck Schumer wrote in a letter to BP CEO Tony Hayward on Wednesday.

"While we understand the need to reassure shareholders that the disaster in the Gulf will not substantially impact BPs long-term financial health, we are concerned that such action to move money will make it much more difficult to repay the U.S. government and American communities that are working around the clock to stem the damage caused by this devastating oil spill," he said.

Investors, meanwhile, worry that escalating costs for cleaning up the disaster now in excess of $1 billion will force the firm to cut back on paymentsto conserve cash.

Perfect storm hits stock

BP shares are under assault from all sides of late. A cut to the dividend would inflict more damage on BP's sagging share price, butanumber of analysts are saying that's likely to happen. BP shares are currently yielding roughly nine per cent.

OnFriday,Standard& Poor's downgraded BP's credit rating from AA to AA-negative. Other ratings agencies slapped similar downgrades a day earlier.

The issue is particularly critical in Britain, where BP's $10 billion worth of annual dividend payments make up a large chunk of income for British investors and pension plans. BP alone made up $1 of every $7 in dividend payments paid in the U.K. last year.

BP's next dividend payment will be paid on June 22. Its next dividend announcementis scheduled for July 27.