(Reuters) - Canada's Inter Pipeline Ltd (TO:IPL) on Monday cut its monthly dividend by 72% and halted the planned sale of its European bulk liquid storage business, the latest hit to the energy patch caused by plummeting oil prices and the coronavirus pandemic.
The dividend cut is a rare step for Canada's pipeline operators and analysts warned that it could foreshadow strains in the sector as oil producers scale back output during the coronavirus outbreak and the Saudi-Russia oil price war.
Shares in Inter Pipeline skidded more than 14% in early trading after the company announced the defensive steps.
Inter Pipeline, which transports crude from Canada's oil sands region, said the cut to its monthly payout would save C$525 million per year.
"It is important to be clear that the decision of the board of directors to reset the dividend in no way reflects a lack of confidence in our core businesses," Chief Executive Christian Bayle said in a statement.
"However, we are currently in a unique and very challenging business environment driven by the COVID-19 pandemic and oil supply conflict between OPEC+ member nations."
Inter Pipeline said potential buyers of the European bulk liquid business had been significantly affected by the pandemic and that now was not the time to pursue a major pan-European transaction. It said it may revisit the process but did not provide a timeline.