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Companies most likely to cut their dividends include Canadian Oil Sands, Baytex and Pengrowth Energy Corp., said Sam La Bell, an analyst at Veritas Investment Research Corp. in a telephone interview in Toronto.

Dividend Cuts

All three have already cut their dividends, though Baytex and Pengrowth will become more vulnerable if oil prices remain low as their hedges begin to roll off as soon as the second half of this year, La Bell said. Canadian Oil Sands, which chopped its payout by 86 per cent in January, may be better off cancelling the dividend altogether as it struggles to generate cash, he said.

“We know the dividend is important to our investors, but even more so is protecting the long-term value of their investment,” said Siren Fisekci, a spokeswoman at Canadian Oil Sands, in an e-mailed response. “We will continue to consider dividends in the context of crude oil prices and Syncrude operating performance.”

Spokesmen for Baytex and Pengrowth didn’t respond to multiple phone and e-mail messages seeking comment.

The prospect of more dividend cuts comes as oil producers have plunged 34 per cent over the past year, the worst-performing industry on the main S&P/TSX Composite Index amid a supply glut and concerns of slowing global growth. Canadian energy firms have already eliminated thousands of jobs and shelved projects to conserve cash.

Twenty-three per cent of firms in the energy index had reduced their dividends at the end of the second quarter, Bloomberg data show. That compares with almost 40 per cent in the same period in 2009 after oil slumped in a global recession, according to the figures.