Morgan Stanley stays at 'underweight' on BP, sees 50% dividend cut

Analysts at Morgan Stanley reiterated their 'underweight' recommendation on shares of BP and their forecast for a 50% dividend cut in 2020.

BP wasn't alone in being forced to slash its payout alongside its second quarter numbers, with Shell and Equinor having already done so and Eni and Total expected to follow suit, the latter at some point in the year.

The Covid-19 pandemic had hammered the entire European Oil&Gas Sector, with the consensus having lowered its estimates for sector-wide second quarter losses over the the past two to three weeks from -$2.0bn to -$5.0bn.

One year ago the sector had clocked in with $12bn of profits.

"In typical cycles, weaker upstream results tend to go hand-in-hand with better downstream results - and vice versa. However, in this downturn,all segments deteriorated simultaneously," the analysts explained.

"Oil & gas [liquid natural gas] prices fell sharply in 2Q, whilst refining margins and marketing volumes weakened at the same time, likely producing a historically large loss."

Asset impairments were also expected to continue rising, by about another $15bn at the sector level, as Total and Equinor threw in the towel and lowered their own long-term price assumptions for oil and gas.