OAO Gazprom OGZPY, a leading natural gas producer, is anticipated to cut dividend following a substantial fall in its 2014 earnings. The earnings generated are used by the company to determine the amount of dividend to be paid by it.

Net income for Gazprom fell to 189 billion rubles (per Russian Accounting Standard) in 2014, a plunge of approximately 70% from the year-ago level of 628 billion. The underperformance maybe attributed to foreign currency loss.

The company generally offers 25% of its domestic profit as payout. In view of the current scenario, Gazprom’s profit is expected to translate into a per year dividend of just 2 rubles per share. The figure is significantly below the current payout of 7.20 rubles per share. Per media reports, management is expected to propose a dividend recommendation in April.

The collapse of ruble in late 2014 has resulted in losses for most Russian exporters amid re-evaluation of foreign currency debt and Gazprom is no different. The Russian government – which is the controlling stakeholder in Gazprom – recently presented its budget that further reflects the weakness.

Per the revised budget submitted on Mar 16, Gazprom’s dividend is expected to fall to about 5.20 rubles per share. Moreover, Europe revenues may see a substantial decline.

Dividend paid by the company has always seen fluctuations. In 2008, the dividend payout fell by a massive 86%, while it improved over 57% in 2011.

Gazprom’s operations include exploration, production, storage, transportation, and sale of gas, gas condensate, and oil worldwide. The company also processes oil, gas condensate and other hydrocarbons and sale of refined products.

Stocks worth considering from the oil and gas integrated oil space include Petrobras Argentina SA PZE, PetroChina Co. Ltd. PTR and Sasol Ltd. SSL. All these stocks hold a Zacks Rank #2 (Buy).