Now, the majors, of course, have dividends that are well spoken for. Many also have stock-buyback programs in place.
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But, as I watch Ensco (ESV) slowly sink into the muck of the shorts -- even after the company has declared a dividend and even though it has plenty of liquidity -- I am reminded of something. A 10% dividend means nothing if people think a stock is going down 20%, or if they believe the company will eliminate its dividend in order to get through this period.
But what astounds me is the lack of firepower at the independent oil names that keep going down. Their stocks might be cheap vs. the assets, but the companies can't afford to buy back shares and would otherwise be at attractive prices given what now seems like an overreaction -- if, that is, we see a snapback.
In other words, the group remains a total free-fire zone, even among the majors that can buy back stock, but I remain convinced that the majors with dividends are the place to go first. I would then go to Schlumberger (SLB) , as it is a huge beneficiary of the potential Halliburton (HAL) -Baker Hughes (BHI) tie-up, and it arguably has the best balance sheet of the entire sector.