Image source: ConocoPhillips.

What: February was a rough month for ConocoPhillips' (NYSE:COP) investors. That's after the company announced a number of cuts, which weighed on the stock causing it to slump by double digits.

So what: ConocoPhillips started the month off on the wrong foot, announcing that it was cutting its capex and dividend. The dividend reduction in particular was hard for investors to swallow. Not only was the amount steep at 66%, but it came after the company repeatedly told investors that the dividend was "safe" and its "top priority." Coinciding with that reduction, it also further reduced its capex plan, trimming its budget from $7.7 billion to $6.4 billion. That will result in its production being roughly flat with 2015, as opposed to the low-single-digit growth it had been projecting.

With oil in the low $30s, cash flow within the industry is taking a big hit, which is causing a widening gap between cash flow and expenses. That's why ConocoPhillips and other large independents like Anadarko Petroleum (NYSE:APC) are cutting cash outflows such as dividends and capex. In ConocoPhillips' case, its cash flow gap is now projected to be $4.4 billion smaller as a result of its recent capex and dividend reductions, while Anadarko Petroleum's dividend reduction improved its cash flow by $450 million while saving roughly $2.7 billion by cutting capex.

Another reason ConocoPhillips and Anadarko Petroleum are cutting cash outflows is that both had their credit rating downgraded last month. ConocoPhillips' was downgraded by Moody's from A2 to Baa2, while Anadarko's was much worse, going from Baa2 to Ba1, putting it below investment grade. In both cases, the rating agency cited weaker cash flow as a big factor in the downgrade.

Now what: The longer the downturn rages on, the bigger its impact on ConocoPhillips' plans. That being said, despite the rough news last month, the company is still in a much better financial position than most of its peers, suggesting that it shouldn't have any problem surviving the downturn.

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