Italy's Eni cut its dividend and suspended a share buyback program on Friday becoming the first oil major to reduce payouts amid a steep oil price decline in a bid to save funds to spur future production growth.
In the first major business plan of Chief Executive Claudio Descalzi,Italy's biggest listed company said it would pay a 2015 dividend of 0.8 euros per share compared with the 1.12 euros per share it paid on 2014 results.
The state-controlled oil major said it would cut investments by 17 percent in the 2015-2018 period to around 48 billion euros ($50 billion) and sell assets worth 8 billion euros.
Eni shares fell more than 6 percent before recouping some of those losses. At 1540 GMT, shares were down 4 percent.
The slump in oil prices since June is testing the ability of listed oil companies to support cash flows and has sparked a rush to cut costs across the sector.
Many big oil firms have announced cuts of 10 to 15 percent to their spending budgets and some have suspended share buybacks.
But most consider high dividends as sacrosanct and investors have said the payouts are the main factor supporting the stocks of major oil firms.
Oil prices collapsed to as low as $46 per barrel in January from peaks last year of $115. Prices have recovered somewhat since January and Brent crude was trading at $56 per barrel on Friday.
Companies like BP and Shell said they would do their utmost to continue paying high dividends and would rather cut operating and capital expenditures (capex), sell assets and increase borrowing than reduce payouts.
When asked in January if Eni would cut dividends, Descalzi told Reuters in January he was confident the company would be able to navigate the low oil price environment.
The company is going through a high investment cycle, unlike some of its peers, meaning it needs an oil price of $120 per barrel to break even - or generate cash after capex, operating expenditure and dividend payments.
By comparison, its rivals ExxonMobil and Shell need a price of around $60 to break even.
Eni, which is shifting its focus increasingly to upstream exploration and production activity, said it was targeting annual output growth of 3.5 percent, up from the 3 percent growth in its previous 2014-2017 plan.