A Rocky Year Ahead For Oil Firms

This year, investors have begun to consider returning to the oil market after depressed crude prices took shares of big name energy companies lower over the past year. However, with prices unlikely to move significantly higher over the next year, oil firms are faced with difficult decisions that could negatively impact shareholders no matter what they choose.Dividends In TroubleBig name oil firms have been able to attract and retain investors through the commodity's downturn by promising to maintain hefty dividend payments that long-term investors rely on. Companies like Chevron Corp. (NYSE: CVX) and Exxon Mobil Corp (NYSE: XOM) are set to dole out more than $35 billion worth of dividend payments this year, a cost that they will probably find difficult to shoulder given the current climate.Ratings At RiskThe problem that these firms face is that they are accountable to shareholders, many of which are expecting dividends to remain the same, or even rise, despite the industry downturn. In order to meet those expectations, oil companies are borrowing to cover their costs, a worrisome trend that could end up causing a credit crunch. Ratings firms have warned that continuing this practice could eventually cost oil and gas firms' their AAA ratings.A Difficult ChoiceDespite companies' efforts to cut costs in order to cover their expenses, most will still struggle to pay out dividends without borrowing. That leaves execs to make a choice between adhering to their dividend promises and protecting their credit ratings. Most are expecting that without any improvement in crude prices, this year will mark the first time many of those companies will face this dilemma. At the moment, companies like Chevron have said they are committed to paying out dividends despite financial hardships, but some analysts say their tone might change once their credit rating is at risk.