Among investors, Friday’s announcement by ConocoPhillips (NYSE: COP) that it would raise its dividend by a penny and cut its deepwater exploration budget was received with mixed reactions. A dividend raise, even a little one, is welcome, and the cut to the capital spending budget while crude oil prices remain low is typically greeted with approval, if not always with cheers.

But Conoco’s stock fell more than 2% after the announcement. Perhaps it was the terms of the three-year contract the company cancelled with Ensco PLC (NYSE: ESV) for a drillship. According to Ensco, Conoco is obligated to pay Ensco the operating day rate of the drillship monthly for two years. The day rate of Ensco’s DS-9 drillship is approximately $550,000 a day. That works out to $16.5 million a month, $198 million per year, or $396 million for the two-year period.

In its press release, Conoco said that details of the termination are under discussion but that the company expects to take a charge in the third quarter as a result. In the first quarter of this year, ConocoPhillips posted net income of $272 million, so a charge of $200 million to $400 million is not trivial. As a special, one-time item it will not affect net earnings or earnings per share, but it has already had an impact on Conoco’s dividend increase, and the impact on cash flow will be non-trivial as well.

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ConocoPhillips CEO Ryan Lance said:

Our decision to reduce spending in deepwater will further increase our capital flexibility and reduce expenses without impacting our growth targets. This strengthens our ability to achieve cash flow neutrality in 2017 even if lower commodity prices persist. … Furthermore, with increased capital flexibility, we can direct more investment to our captured resource base of 44 billion barrels of oil equivalent, which includes significant identified inventory in the highest value areas of the Eagle Ford, Bakken, Permian and Western Canada unconventional plays, as well as our legacy businesses around the world. We believe this will accelerate value for shareholders by shortening the cycle time on our overall investment program.

So, investors have to take at least one for the team. A small dividend increase now accompanied by some reduction in the capex budget will pay off later. Conoco promises to pursue organic growth through “more focused exploration programs.” Now all the company has to do is catch the growth it is pursuing. That is always trickier.

Shares traded down about 1.7% early Friday after noon, at $56.96 in a 52-week range of $56.65 to $87.09. The low was posted Friday morning. The consensus price target on the stock is $74.20.

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