The dilemma facing the oil group is occupying the attention of the NatWest Securities investment house, which regards the shares as a sell.
Graham Hearne, chairman, has adopted a progressive dividend policy but is now finding difficulty producing the earnings to match the payment.
A dividend cut would be a 'prudent option' but would have a devastating impact on the shares - a 50 per cent reduction could knock 100p off the shares, NatWest calculates. The price fell 4p to 435p yesterday.
And a cut could alert a predator. The Arco giant needs to replace reserves and could be interested. So could Agip. Elf, the French group, has made no secret that its Enterprise stake is available.
The rest of the oil sector languished as the bitter arctic weather that has swept Asia, Europe and North America continued to have little impact on the crude price, still around dollars 13 a bulk barrel.
The stock market was in ebullient form as the scent of lower interest rates grew stronger. The latest round of Whitehall statistics left the impression that economic recovery is flagging and the encouragement of cheaper money is necessary.
Government stocks, overshadowed by next week's pounds 2.5bn auction, gained up to half a point at the long end of the market.
Most interest rate-sensitive sectors scored from the euphoria, with banks enjoying the bonus of a positive James Capel review. Abbey National rose 9p to 522p and Lloyds Bank 10p to 611p.
But HSBC, Capel's parent, dipped 17p to 992p as the stockbroker reduced its profit forecasts. It lowered this year's estimate from pounds 2.93bn to pounds 2.687bn and next year's from pounds 3.43bn to pounds 3.085bn.
British Aerospace lost altitude as Boeing and McDonnell Douglas were said to have won a dollars 6bn Saudi aircraft contract at the expense of Airbus Industrie, where BAe has a 20 per cent interest.
A pounds 300m Ministry of Defence order, naming BAe as the prime contractor, extracted a little of the sting and the shares closed above their low at 531p, down 9p.
Rolls-Royce, which could reap some fringe rewards from an American victory, was unchanged at 180p.
The European Commission's price-rigging fine failed to ruffle British Steel, up 1p to 145.5p. The company said it intended to appeal against the pounds 25m penalty.
Confirmation that QVC had lost the battle for Paramount enlivened entertainment shares, with some optimists punting on the beaten US group turning its attention to a British target.
Main beneficiary was Thorn EMI. With reports of booming music sales helping, the shares rose 26p to 1,131p.
Yorkshire-Tyne Tees TV slumped 28p to 336p, with the warrants off 18p at 167p, as profit- takers enjoyed themselves after the recent strong advance inspired by takeover hopes.
Anglia TV rose 7p to 651p as the bid from MAI went unconditional and Border TV jumped 25p to 200p, with takeover speculators alighting on the shares.
The builder George Wimpey moved ahead as bid hopes mingled with talk of lower interest rates. The shares rose 5p to 235p.
Boots, with Barclays de Zoete Wedd positive, rose 7p to 543p. Supermarkets continued to benefit from the trading statement by Argyll, up 6p to 262p. Great Universal Stores edged ahead a further 7p to 609p.
Tate & Lyle, meeting analysts, rose 4p to 444p and Hazlewood Foods held at 160p ahead of an institutional visit.
Cadbury Schweppes gained 8p to 527p. The market is growing increasingly convinced that it is near to resolving its stand-off with Dr Pepper/Seven-Up, the third largest US soft drinks group.
There is talk that Cadbury, which, to the dismay of the Dr Pepper management, snapped up a 25.9 per cent stake, is about to gain boardroom representation.
The British group is already a significant influence in the US, a market dominated by Coca-Cola and Pepsi-Cola. Last year it strengthened its role by buying a US group, A&W.
The pounds 2m Unipower takeover lifted Alvis 9p to 67p, and Racal Electronics improved 9p to 222p, reflecting a pounds 5.5m contract and persistent takeover speculation.
London International Group, the condom maker and photo processor, held at 151p as Oakmark International, a US fund management group, cut its stake to 4.4 per cent, selling 2 million shares. Glaxo Holdings rose 10p to 675p ahead of today's figures.
Insurance shares remained under the influence of Union des Assurances de Paris, which has made no secret of its desire to expand in Britain. Guardian Royal Exchange improved 6p to 242p and Commercial Union 5p to 647p.
The current enchantment with obscure investment trusts specialising in developing countries jerked Turkey Trust 23p higher to 306p. The warrants jumped 31p to 180p.
It has achieved strong asset gains on the back of the booming Turkish economy. On Monday it declared assets had climbed to 306.16p per share against 289.78p a month earlier.
Great Western Resources, a US energy group, hardened 1p to 39p as it announced a placing and open offer at 38p to raise pounds 14.8m.
The newcomer Trifast, a distribution group, reached 215p against a 200p placing.
Expect developments soon at Quadrant, the troubled photographic processing group. The shares rose 2p to 37p. There is talk of a significant acquisition accompanied by a rights issue. Quadrant's prospects improved when David Coughlan, with a 12.6 per cent interest, moved in as chief executive. His partner Jean-Marc Cangardel has 14.1 per cent.
Stockbroker Henry Cooke Lumsden has cut its profit forecast for Intercare, the health care group, but remains a buyer of the shares. The new estimate for the year ending October is pounds 5.2m, down from pounds 6m. HCL says the shares have underperformed by 36 per cent but 'the long-term story remains essentially positive'. The shares were unchanged at 146p.
The FT-SE index jumped 24.5 points to 3,417.7 and the FT-SE 250 index climbed 22.1 points to 4,050.6. Turnover was 817.5 million shares from 31,321 bargains. The account ends on 25 February with settlement on 7 March.
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