ConocoPhillips (COP) announced Q4 and full year 2015 financial results on the morning of February 4, 2016. The news included a capitulation to the on-going deterioration of business conditions in the oil patch: COP slashed its dividend by two-thirds:

“ConocoPhillips (NYSE: COP) today announced it is taking actions to maintain its strong balance sheet in response to both the weak outlook for commodity prices and expected credit tightening across the industry. The actions will position the company to accelerate shareholder value creation as prices recover.

The company announced that its board of directors approved a reduction in the company’s quarterly dividend to 25 cents per share, compared with the previous quarterly dividend of 74 cents per share.”

Chairman and chief executive officer Ryan Lance went on to lament that the decision to cut the dividend was a “difficult one.” Essentially the company is coming to terms with the very real possibility that commodity prices stay lower for longer than originally anticipated.

“The dividend has been, and will continue to be, a top priority. We still intend to provide a competitive dividend, while significantly lowering the breakeven price for the company and substantially reducing the level of borrowing in 2016. Our actions also position us to deliver strong absolute and relative performance as prices recover.”

Up until now, COP had worn a very brave face. In doing so, COP’s cautionary tale reminds us that we cannot assume that company management fully grasps and/or is ready and willing to communicate the true range of operational realities facing the business. (For the sake of argument, I am excluding the chance that, in this case, management actually feared a dividend cut but did not want to confront the possibility).

An irony of COP’s capitulation comes from six months ago when the company announced Q2 2015 financial results on July 30, 2015. At that time, COP made headlines by boldly and emphatically pronouncing that its dividend was safe. Here is Lance as quoted in the the Seeking Alpha transcript of the conference call (emphasis mine):