Heavyweight oil majors BP and Royal Dutch Shell came under pressure after broker Barclays Capital raised the prospect of both companies cutting their dividends if the oil price continues to decline.
In a bearish sector note, Barclays Capital analyst Tim Whittaker advised clients to sell both BP and Shell as he believes they are overvalued compared to European peers, Total and Eni.
“We believe the oil sector is entering a steeper and longer downturn than either the oil or equity markets imply, and that large-cap oil shares are not as defensive as currently priced. After 30pc outperformance in the last 12 months, we initiate coverage with a negative sector view. BP and Shell are our key underweight stocks,” wrote Mr Whittaker.
He points out that with less free cash flow, over the next few years dividends at both companies are likely to be paid out to shareholders using debt.
Mr Whittaker warned: “Most integrated companies can do this, given their strong balance sheets. However, the market has priced the sector assuming little if any dividend risk, which may not be the case if the oil price falls further or, as we assume, stays lower for longer than the forward curve implies.
“If margins remain low there may come a point when company managements will have to assess whether shareholder returns are best served by maintaining dividends at the cost of growth funding, or by taking the longer view and perhaps taking dividend holidays and building advantaged positions for the next upturn”.
BP shed 9 almost 2pc to 453½p and Shell lost 39p to £15.58.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
